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Prior to 2010, Starks Vilholesalers Company had not kept department income statements. To achieve better management control, the company decided to install department-by- department accounts.
Prior to 2010, Starks Vilholesalers Company had not kept department income statements. To achieve better management control, the company decided to install department-by- department accounts. At the end of 2010, the new accounts showed that although as a whole the business was protable, the dry goods department had a substantial loss. The following income statement for the dry goods department reports on operations for 2019: Starks Wholesalers Company Dry Goods Department Partial Income Statement For 2019 Sales P 1,200,000 Cost of goods sold 000,000 Gross margin P 400,000 Less: Payroll, direct labor, and supervision P 120,000 Commissions of sales staff (a) l00,000 Rent (b) 40,000 Insurance on inventory 20,000 Depreciation (c) 00,000 Administration and general office (d) 00,000 Interest for inventory carrying costs (e) 10,000 Total costs 410,000 Net income {loss} MM
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