LT Roofing Company sells roofing products through two departments, composite and steel. Operating information for 2019 is as follows:

Common operating expenses of the firm were $180,000.

Required

a. Prepare a department income statement showing department contribution to common expenses and net income of the firm. Assume an overall effective income tax rate of 30%. LT uses a periodic inventory system.

b. Calculate the gross profit percentage for each department.

c. If the common expenses were allocated 55% to the composite department and 45% to the steel department, what would the net income be for each department!

Transcribed Image Text:

Inventory, January 1, 2019. Inventory, December 31, 2019 Net sales.. Purchases, Purchases returns Composite Department $ 90,000 75,000 Steel Department $ 39,000 45,000 1,170,000 720,000 726,000 543,000 42,000 12,000 Purchases discounts 24,000 6,000 Transportation in. 27,000 21,000 Traceable department expenses 162.000 84.000