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Accounting F-7

** Please see the attached file for the complete problem description **

Brurien,Inc., operates a retail store with two departments, A and B. Its departmental income statement for the current year follows: (please see the attachment F-7-1)

Burien allocates building depreciation, maintenance, and utilities on the basis of square footage. Office expenses are allocated on the basis of sales.

Management is considering an expansion to three-department operation. The proposed Department C would generate $120,000 in additional sales and have a 17.5% contribution to overhead. The company owns its building. Operating Department C would redistribute the square footage to each department as follows:
A, 19,040; B, 21,760 sq. ft. ; C 13,600.

Increases in indirect expenses would include: maintenance, $500; utilities, $3,800; and office expenses, $1,200

Complete the following departmental income statements, showing projected results of perations for the three sales departments ( Round amounts to the nearest whole dollar.)

Please see the attachment F-7-2


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