Part 1

Prepare an income statement showing departmental contribution margin based on the following:

Dept. X Dept. Y Rent Expense

Space (square feet) 17,500 35,000

Net Sales $60,000 $40,000

Cost of Goods Sold 18,000 16,000

Rent Expense (allocated based on square feet) $2,700

Part 2

From the following transactions, prepare the appropriate general journal entries for the month of April.

1. Raw materials costing $60,000 were issued from the storeroom.

2. Direct labor of $53,000 was charged to production.

3. Indirect labor costs of $17,000 were incurred.

4. Overhead was applied at the rate of 40% of direct labor dollars.

5. Completed products costing $42,000 were transferred to finished goods.

6. Products costing $32,000 were sold.

Part C

Prepare an income statement showing departmental contribution margin based on the following:

Dept. X Dept. Y Rent Expense
Space (square feet) 17,500 35,000
Net Sales $60,000 $40,000
Cost of Goods Sold 18,000 16,000
Rent Expense (allocated based on square feet) $2,700