amesway Corporation has two separate divisions that operate

amesway Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year:

The White Division occupies 22,000 square feet in the plant. The Grey Division occupies 32,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $52,000. Compute gross profit for the White and Grey Divisions, respectively.

$280,000; $259,000.

$90,000; $209,000.

$90,000; $177,000.

$370,000; $370,000.

$68,000; $177,000.

Solution

Gross Profit = Sales - Cost of goods sold

White Division:-

Gross profit = 400000 - 120000

= $ 280000

Grey Division:-

Gross profit = 420000 - 161000

= $ 259000

Conclusion:- Gross profit for each division mentioned below:-

So, The right answer is First Option i.e., $280,000; $259,000.