Renton CoHas Two Operating (Production)departments Supported by a Number of Service

question 14

Essay

Renton Co.has two operating (production)departments supported by a number of service departments.The following information was collected for a recent period:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$$\text { Direct Costs }$
$\begin{array}{lrrr}&\text { Machining}&\text { Assembly }&\text { Indirect }\\&\text { Department }&\text { Department }&\text { Cost}\\\text { Salaries } & \$ 122,400 & \$ 85,700 & \$ 36,700 \\\text { Insurance } & 20,200 & 11,000 & 5,500 \\\text { Utilities } & 23,900 & 13,900 & 2,000 \\\text { Depreciation } & 20,700 & 11,500 & 13,800 \\\text { Maintenance } & 7,000 & 4,700 & 29,400 \\\text { Office expenses } & -0- & -0- & 71,100 \\\text { Cost of goods sold } & 327,600 & 121,200 &\end{array}$
Indirect costs are allocated as follows: salaries on the basis of sales,office expenses on the basis of the number of employees,and all other costs on the basis of square footage.Additional information about the production departments follows:
$$\begin{array} { l c c } & \text { Square } & \text { Number of } \\& \text { Footage } & \text { Employees } \\\text { Machining } & 14,535 & 78 \\\text { Assembly } & 4,845 & 52\end{array}$$
Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796.Determine the departmental contribution to overhead and the departmental net income for each production department.

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Definitions:

Strip Bond

A debt security that has had its periodic interest payments removed, trading only on the principal amount and offering a final payment at maturity.

Par Value

Par value is the nominal or face value of a bond, share, or coupon as stated by the issuer.

Coupon Payments

Regular interest payments made to bondholders over the life of a bond.

Price Paid

The amount of money exchanged for the acquisition of a good, service, or asset.