Overhead And Net Income Calculation Research Paper And Presentation

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Question Description

Read Problem 9-4A in your textbook and answer the questions that follow. Your response should be 4 to 6 pages long, including attachments and follow APA format.

Also read Problem 10-6A in your textbook and answer the questions that follow.

Your response should be 2-3 pages long, including attachments and follow APA format.

CLA2 Comprehensive Learning Assessment (CLA 2) Presentation In addition to your CLA2 report, please prepare a professional PowerPoint presentation summarizing your findings for CLA2. The presentation will consist of your major findings, analysis, and recommendations in a concise presentation of 15 slides (minimum). You should use content from your CLA2 report as material for your PowerPoint presentation.

Textbook to use is:

Managerial Accounting 5th edition
John J. Wild University of Wisconsin at Madison Ken W. Shaw University of Missouri at Columbia

order:

Abstract

Introduction

Problem

Solutions

Conclusion

Recommendations




Tutor Answer

Tutor_Booth
School: University of Virginia

Hey! Kindly find the attached answer. Thank you

Overhead and Net Income
Student’s Name
Institution

Date

Problem 9-4A - Determine the departmental
contribution to overhead and the
departmental net income


Departmental contribution to overhead refers to the sum of money that is
available in one department after the direct expenses are paid to assist in
paying for the overhead of a company.



It is calculated as follows:

Departmental contribution to overhead= Departments revenue – direct expenses



In the case of Vortex Company, there are two departments; A and B. The
sales are $800,000 and $450,000 from department A and department B
respectively.



The cost of goods sold (COGS) are $497,000 for department A and $291,000
for department B.



From the above information; the gross margin can be calculated for the two
benefits.
Gross margin = Sales - COGS



Gross margin = Sales - COGS



Therefore, gross margin will be:
Department A = $800,000 - $497,000 = $303,000
Department B = $450,000 - $291,000 = $159,000

Direct expense


The direct expenses refer to all the incurred expenses which vary directly
with the changes in the volume of cost object.



The total direct expenses are calculated by adding each direct expense
from the departments.



Therefore, total direct expenses will be;
Department A =$125,000 + $20,000 + $24,000 + $21,000 + $7,000 = $
197,000
Department B = $88,000 + $10,000 + $14,000 + $12,000 + $$5,000 =

$129,000



Therefore, departmental contribution to overhead will be:



Department A = $303,000 - $197,000 = $106,000



Department B = $159,000 - $ 129,000 = $30,000



Departmental net income refers to the net sales in a department when all
the expenses are subtracted.



Vortex Company will realize its net income when all the costs from
department A and department B are taken out.





The allocated indirect expense for the company is as follows:
Salaries

$36,000

Insurance

$6,000

Depreciation

$15,000

Office expenses

$50,000

There is a need to calculate the indirect expense for each department as this
will help in calculating the departmental net income. Thus, to find out the
cost of salaries for both the departments, total sales from both the
companies will be required.



Total sales = Sales from department A + Sales from department B



= $800,000 + $450,000 = $1,250,000









To calculate the percentage of each department, the formula used will be:
=

𝐷𝑒𝑝𝑎𝑟𝑡𝑚𝑒𝑛𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠

× 100

Department A =

$800,000
$1,250,000

× 100 = 64%

Department B =

$450,000
$1,250,000

× 100 = 36%

Therefore, the salaries amount for both departments will be calculated as
follows;





Department A =

64
100

× $36,000 = $23,040

Department B =

36
100

× $36,000 = $12,960

Indirect expenses


Indirect expenses refer to all the expenses that are incurred in the operating

process of a company.


This can be either as a whole or a segment of the company and thus cannot
be directly linked to the cost object.



In the case of Vortex Company, the indirect expenses are provided as a whole,
but from the given information, departmental indirect expenses can be
calculated.



To calculate the indirect expenses (insurance and depreciation) for each
department, departmental square footage will be used.



The square footage is 28,000 for department A and 12,000 for department B.



The total square footage for the company is; = 28,000 + 12,000 = 40,000



To calculate the percentage of all the other expenses, the following formula
𝐷𝑒𝑝𝑎𝑟𝑡𝑚𝑒𝑛𝑡𝑎 𝑆𝑞.𝑓𝑡
will be used; =
× 100
𝑇𝑜𝑡𝑎𝑙 𝑆𝑞.𝑓𝑡



Insurance expenses will be as follows;
28,000
40,000



Department A=



Department B =



12,000
40,000

× 100 = 70% =

70
100

× 100 = 30% =

30
100

Depreciation expenses will be:
70
100
30
=
100

× $6,000 = $4,200



Department A =

× $15,000 = $10,500



Department B

× $15,000 = $4,500

× $6,000 = $1,800



For office expenses, the provided number of employees will be used.



The n...

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Review

Anonymous
Good stuff. Would use again.

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