Vaughn CoOperates Three Separate Departments (A,B,C) Required: Prepare an Income Statement Showing the Departmental Contributions to for the Current

question 50

Essay

Vaughn Co.operates three separate departments (A,B,C).The data below are provided for the current year:
$$\begin{array} { l r l } \text { Total sales } & \$ 120,000 & ( \$ 40,000 \text { from each department) } \\\text { Cost of goods sold } & 80,000 & ( 50 \% \text { from } A ; 25 \% \text { from } B ; 25 \% \text { from } C ) \\\text { Direct expense } & 26,000 & \$ \$ 6,000 \text { from } A ; \$ 12,000 \text { from } B ; \$ 8,000 \\& & \text { from } C ) \\\text { Indirect expenses } & 9,000 &\end{array}$$
Required: Prepare an income statement showing the departmental contributions to overhead for the current year.

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Definitions:

Oligopolistic Models

Economic models that describe markets in which a few firms dominate, often leading to pricing and output decisions that consider the actions of competitors.

Cartel

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often in order to maximize the members' profits at the expense of consumers.

Herfindahl-Hirschman Index

A measure used to assess the market concentration and competition level within an industry, calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers.

Market Share

The portion of a market controlled by a particular company or product, indicative of competitiveness.