31) The data processing department of a tax firm would be a profit center.
32) In departmental accounting, it is necessary to break down revenue, but not expenses by departments.
33) A department with sales of $80,000 and cost of goods sold of $55,000 has a gross profit of $25,000.
34) To calculate departmental gross profit, separate accounts should be set up for Sales, Purchases, etc., for each department.
35) To calculate gross profit, subtract cost of goods sold and operating expenses from net sales.
36) To calculate gross profit, subtract cost of goods sold from net sales.
37) Departmental income statements are prepared to indicate how well each department is performing.
38) A department income statement showing gross profit by department is a useful tool in analyzing performance of individual departments.
39) Most companies that prepare departmental income statements also prepare departmental balance sheets.
40) A department with sales of $120,000; cost of goods sold of $75,000; and operating expenses of $20,000 has a gross profit of $25,000.