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INCOME STATEMENT WITH DEPART MENTAL DIRECT OPERATING MARGIN AND TOTAL OPERATING INCOME Durwood Thomas operates the business Thomas Security that sells security equipment for commercial property and residential homes. The following information is provided for the year ended December 31, 20--: REQUIRED 1. Prepare an income statement showing departmental direct operating margin and total operating income. 2. Calculate departmental direct operating margin percentages.
College Accounting, Chapters 1-27 ...
Solutions
College Accounting, Chapters 1-27 ...
INCOME STATEMENT WITH DEPART MENTAL DIRECT OPERATING MARGIN AND TOTAL OPERATING INCOME Durwood Thomas operates the business Thomas Security that sells security equipment for commercial property and residential homes. The following information is provided for the year ended December 31, 20--:
REQUIRED
1. Prepare an income statement showing departmental direct operating margin and total operating income.
2. Calculate departmental direct operating margin percentages.
1.
Prepare an income statement for T Security for the year ended December 31, 20--, showing the departmental direct operating margin and total operating income.
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 operating income: The departmental income statement reports the departmental operating income, which is the excess of departmental gross profit over the operating expenses incurred.
Formula for departmental operating income:
Prepare an income statement for T Security for the year ended December 31, 20--, showing the departmental direct operating margin and total operating income.
| T Security | |||
| Income Statement | |||
| For the Year Ended December 31, 20-- | |||
| Commercial Property | Residential Property | Total | |
| Net sales | $465,000 | $135,000 | $600,000 |
| Cost of goods sold | 279,250 | 54,000</ | |
2.
Compute the departmental direct operating margin percentage of both the departments.
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