Question

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: Rails Division Locomotive Division Corporate Total Cost of goods sold $ 47,200 $30,720 Direct operating expenses 27,200 20,040 Sales 108,000 78,000 Interest expense $ 2,040 General overhead 18,160 Income tax 4,700

The income from operations for the Rails Division is

a.$33,600

b.$8,700

c.$21,150

d.$60,800

Answer 1

a.$33,600

Step-by-step explanation:

The computation of the income from operations is shown below:

= Sales - costs of goods sold - direct operating expense

= $108,000 - $47,200 - $27,200

= $33,600

We simply deduct the direct operating expense and the costs of goods sold from the sales revenue so that the correct amount can come

All other information which is given is not relevant. Hence, ignored it