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. $

(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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