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3 September, 11:29

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. $

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  1. 3 September, 13:17
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    (a) $56,730

    (b) $36,330

    (c) $ 51,800

    (d) $24,800

    (e) $36,230

    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
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