Problem 22-3B Departmental income statements P3 Bonanza has two operating departments (Movies and Video Games) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Departmental Income Statements Sales salaries Supplies used Depreciation Equipment Rent Utilities Share of office department expenses Total expenses Income (loss) Movies $600,000 420,000 180,000 49,500 4,000 4,500 41,000 7,380 56,250 162,630 $17,370 Required 1. Prepare a departmental contribution to overhead report (see Exhibit 22.12). 2. Should the video games department be eliminated? Explain. Video Games $200,000 154,000 46,000 21,000 1,000 3,000 9,000 1,620 18,750 54,370 $ (8,370) Combined $800,000 574,000 226,000 70,500 5,000 7,500 50,000 9,000 75,000 217,000 $9,000

Problem 22-3B Departmental income statements P3 Bonanza has two operating departments (Movies and Video Games) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Departmental Income Statements Sales salaries Supplies used Depreciation Equipment Rent Utilities Share of office department expenses Total expenses Income (loss) Movies $600,000 420,000 180,000 49,500 4,000 4,500 41,000 7,380 56,250 162,630 $17,370 Required 1. Prepare a departmental contribution to overhead report (see Exhibit 22.12). 2. Should the video games department be eliminated? Explain. Video Games $200,000 154,000 46,000 21,000 1,000 3,000 9,000 1,620 18,750 54,370 $ (8,370) Combined $800,000 574,000 226,000 70,500 5,000 7,500 50,000 9,000 75,000 217,000 $9,000

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter25: Departmental Accounting

Section: Chapter Questions

Problem 1MP: MASTERY PROBLEM Bobs Acme Supermarket has been in operation for many years, offering high-quality...

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