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11 December, 04:43

Jansen Company reports the following for its ski department for the year 2017. All of its costs are direct, except as noted. Sales $ 615,000 Cost of goods sold 435,000 Salaries 111,000 ($25,200 is indirect) Utilities 16,300 ($5,300 is indirect) Depreciation 53,600 ($17,300 is indirect) Office expenses 26,600 (all indirect) 1. Prepare a departmental income statement for 2017. 2. & 3. Prepare a departmental contribution to overhead report for 2017. Based on these two performance reports, should Jansen eliminate the ski department?

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  1. 11 December, 06:42
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    a. The preparation of departmental contribution to overhead report for 2017 is shown below:-

    Jansen Company

    Departmental Income Statement-Ski Department

    For Year Ended December 31, 2017

    Sales $615,000

    Cost of goods sold $435,000

    Gross profit $180,000

    Direct expenses

    Salaries $111,000

    Utilities $16,300

    Depreciation $53,600

    Office expenses $26,600

    Operating loss - $27,500

    b. Departmental contribution to overhead = Gross profit of the department - All direct expenses of that department

    Jansen Company

    Departmental Contribution to Overhead-Ski Department

    For Year Ended December 31, 2017

    Sales $615,000

    Cost of goods sold $435,000

    Gross profit $180,000

    Direct expenses

    Salaries $85,800

    ($111,000 - $25,200)

    Utilities $11,000

    ($16,300 - $5,300)

    Depreciation $36,300

    ($53,600 - $17,300)

    Total direct expenses $133,100

    Contribution to overhead $166,690

    3.

    No, Jansen should not eliminate the Ski Department
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