Vortex Company operates a retail store with two departments. Information about those departments follows.

The company also incurred the following indirect costs.
Salaries . . . . . . . . . . . . . . $36,000
Insurance . . . . . . . . . . . . . . 6,000
Depreciation . . . . . . . . . . . 15,000
Office expenses . . . . . . . . 50,000
Indirect costs are allocated as follows: salaries on the basis of sales; insurance and depreciation on the basis of square footage; and office expenses on the basis of number of employees. Additional information about the departments follows.

Required
1. For each department, determine the departmental contribution to overhead and the departmental net income.
2. Should Department B be eliminated?Explain.

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DepartmentA Department B ales-+.. Cost of goods sold. Direct expenses $800,000 497,000 $450,000 291,000 Salarles 25,000 20,000 24,000 21.000 7,000 88.000 10,000 14,000 12,000 5,000 . Department Square footage 28,000 12,000 Number of employees 75 50