Question

The following financial information was summarized from the accounting records of Buddy Corporation for the current year ended December 31: Beagle Division Dalmatian Division Corporate Total Cost of goods sold $47,200 $30,270 Direct operating expenses 27,000 20,400 Net sales 99,000 87,000 Interest expense $2,040 General overhead 18,160 Income tax 4,700

Required: Calculate:

(a) The gross profit for the Dalmatian Division. $

(b) The income from operations from the Dalmatian Division. $

(c) The gross profit for the Beagle Division. $

(d) The income from operations from the Beagle Division. $

(e) The net income for Buddy Corporation. $

Answer 1

(a) $56,730

(b) $36,330

(c) $ 51,800

(d) $24,800

(e) $36,230

Step-by-step explanation:

(a) Gross profit for the Dalmatian Division:

= Net sales - Total Cost of goods sold

= $87,000 - $30,270

= $56,730

(b) Income from operations from the Dalmatian Division:

= Gross Profit - Direct operating expenses

= $56,730 - $20,400

= $36,330

(c) Gross profit for the Beagle Division:

= Net sales - Total Cost of goods sold

= $99,000 - $47,200

= $ 51,800

(d) Income from operations from the Beagle Division:

= Gross Profit - Direct operating expenses

= $51,800 - $27,000

= $24,800

(e) Total income from operations;

= $36,330 + $24,800

= $61,130

Earnings before interest and taxes:

= Total income from operations - General overhead

= $61,130 - $18,160

= $42,970

Earnings before taxes:

= Earnings before interest and taxes - Interest expense

= $42,970 - $2,040

= $40,930

Net income = Earnings before taxes - Income taxes

= $40,930 - $4,700

= $36,230