Question

Susie's Sweet Shop has the following sales, payroll, and property factors:

Item Iowa Missouri
Sales 70.00% 32.81%
Payroll 89.60% 5.90%
Property 74.02% 25.64%
What are Susie's Sweet Shop's Iowa and Missouri apportionment factors under each of the following alternative scenarios?

Note: Do not round intermediate calculations. Round your final answers to 2 decimal places.

Required:

a. Iowa and Missouri both use a three-factor apportionment formula.

b. Iowa and Missouri both use a four-factor apportionment formula that double-weights sales.

c. Iowa uses a three-factor formula and Missouri uses a single-factor apportionment formula (based solely on sales).

Answer 1

a. Iowa: 233.62%, Missouri: 64.35% b. Iowa: 299.22%, Missouri: 96.16% c. Iowa: 70.00%, Missouri: 32.81%

Step-by-step explanation:

a. To calculate Susie's Sweet Shop's Iowa and Missouri apportionment factors using a three-factor formula, we need to add up the sales, payroll, and property factors for each state. For Iowa, the apportionment factor is 70.00% + 89.60% + 74.02% = 233.62%. For Missouri, the apportionment factor is 32.81% + 5.90% + 25.64% = 64.35%.

b. To calculate the apportionment factors using a four-factor formula that double-weights sales, we need to multiply the sales factor by 2 before adding up all the factors. For Iowa, the apportionment factor is (70.00% * 2) + 89.60% + 74.02% = 299.22%. For Missouri, the apportionment factor is (32.81% * 2) + 5.90% + 25.64% = 96.16%.

c. To calculate the apportionment factors using a three-factor formula for Iowa and a single-factor formula for Missouri, we only need to consider the sales factor. For Iowa, the apportionment factor is 70.00%. For Missouri, the apportionment factor is 32.81%.