Perkins Appliance & Furniture Company has two departments, appliances and furniture. Operating information for 2016 appears below.

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Perkins Appliance & Furniture Company has two departments, appliances and furniture. Operating information for 2016 appears below.

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Common operating expenses of the firm were \($180,000\) .
Required

a. Prepare a departmental income statement showing departmental contribution to common expenses and net income of the firm. Assume an overall effective income tax rate of 40%. Perkins uses a periodic inventory system.

b. Calculate the gross profit percentage for each department.

c. If the common expenses were allocated 70% to the appliance department and 30% to the furniture department, what would the net income be for each department?

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Managerial Accounting For Undergraduates

ISBN: 9780357499948

2nd Edition

Authors: James Wallace, Scott Hobson, Theodore Christensen

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