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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756
Chapter 25, Problem 3CE
Textbook Problem
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The sales, gross profit, and condensed direct operating expenses of departments A and B of Beedles Distributors for the current year are as follows:

Chapter 25, Problem 3CE, The sales, gross profit, and condensed direct operating expenses of departments A and B of Beedles

Compute the direct operating margin and direct operating margin percentage for each department.

To determine

Ascertain the direct operating margin and direct operating margin percentage for both the departments.

Explanation of Solution

Departmental direct operating margin: The departmental income statement reports the departmental direct operating margin, which is the excess of departmental gross profit over the direct operating expenses incurred.

Formula for departmental direct operating margin:

Departmental direct operating margin} = Departmental gross profit–Direct operating expenses

Ascertain the direct operating margin for both the departments.

ParticularsDepartment ADepartment B
Gross profit$140,000$210,000
Direct operating expenses65,00090,000
Direct operating margin$75,000$120,000

Table (1)

Direct operating margin percentage: This ratio gauges the operating profitability by quantifying the amount of operating income earned from business operations from the sales generated

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Chapter 25 Solutions

College Accounting, Chapters 1-27
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Ch. 25 - JW Enterprises is organized into three...Ch. 25 - The sales, gross profit, and condensed total...Ch. 25 - The sales, gross profit, and condensed direct...Ch. 25 - For what purpose are departmental reports useful...Ch. 25 - What are the differences between a cost center, a...Ch. 25 - In what two ways can the information necessary to...Ch. 25 - What is the difference between direct and indirect...Ch. 25 - On what basis are direct expenses assigned to...Ch. 25 - On what basis are indirect expenses allocated to...Ch. 25 - What information is contained in a departmental...Ch. 25 - Why must management be cautious in interpreting...Ch. 25 - Distinguish between departmental gross profit,...Ch. 25 - In what ways can an income statement showing...Ch. 25 - GROSS PROFIT SECTION OF DE PART MENT AL INCO ME ST...Ch. 25 - ALLOCATING OPERATING EXPENSESQUARE FEET Weaverling...Ch. 25 - ALLOCATING OPERATING EXPENSERELATIVE NET SALES...Ch. 25 - ALLOCATING OPERATING EXPENSEMILES DRIVEN Mercado...Ch. 25 - COMPUTING OPERATING INCOME The sales, cost of...Ch. 25 - DEPART MENTAL DIRECT OPERATING MARGIN AND DIRECT...Ch. 25 - INCOME STATEMENT WITH DEPART MENTAL GROSS PROFIT...Ch. 25 - INCOME STATE MENT WITH DEPARTMENTAL OPERATING...Ch. 25 - INCOME STATEMENT WITH DEPART MENTAL DIRECT...Ch. 25 - WHETHER TO DISCONTINUE A DEPART MENT Williams and...Ch. 25 - GROSS PROFIT SECTION OF DEPART MENTAL INCOME...Ch. 25 - ALLOCATING OPERATING EXPENSESQUARE FEET Johnson...Ch. 25 - ALLOCATING OPERATING EXPENSERELATIVE NET SALES...Ch. 25 - ALLOCATING OPERATING EXPENSEMILES DRIVEN Herbert...Ch. 25 - COMPUTING OPERATING INCOME The sales, cost of...Ch. 25 - DEPART MENTAL DIRECT OPERATING MARGIN AND DIRECT...Ch. 25 - INCOME STATEMENT WITH DEPART MENTAL GROSS PROFIT...Ch. 25 - INCOME STATEMENT WITH DEPART MENTAL OPERATING...Ch. 25 - INCOME STATEMENT WITH DEPART MENTAL DIRECT...Ch. 25 - WHETHER TO DISCONTINUE A DEPART MENT Mueller and...Ch. 25 - MANAGING YOUR WRITING Two department heads are...Ch. 25 - ETHICS CASE Melanie Sanders and Joyce ODell were...Ch. 25 - MASTERY PROBLEM Bobs Acme Supermarket has been in...Ch. 25 - CHALLENGE PROBLEM This problem challenges you to...

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