# 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 ...

22nd Edition
James A. Heintz + 1 other
Publisher: Cengage Learning
ISBN: 9781305666160

Chapter
Section

### College Accounting, Chapters 1-27 ...

22nd Edition
James A. Heintz + 1 other
Publisher: Cengage Learning
ISBN: 9781305666160
Chapter 25, Problem 9SPA
Textbook Problem
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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--:REQUIRED1. Prepare an income statement showing departmental direct operating margin and total operating income.2. Calculate departmental direct operating margin percentages.

1.

To determine

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

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:

Departmental operating income = Departmental gross profit–Operating expenses

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.

To determine

Compute the departmental direct operating margin percentage of both the departments.

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