Mastery Problem   Instructions Chart of Accounts Labels and Amount Descriptions Income Statement Analysis       Instructions     Bob’s Acme Supermarket has been in operation for many years, offering high-quality groceries, produce, and meat at reasonable prices. Accounting records are maintained on a departmental basis with assignment of direct expenses and allocation of indirect expenses through the use of various procedures. Selected operating information for the year ended December 31, 20--, is as follows:   Grocery Meat Produce Total Net sales $2,104,890 $660,500 $345,800 $3,111,190 Cost of goods sold 1,683,912 462,350 207,480 2,353,742 Direct operating expenses:         Store clerks’ wages expense 125,000 58,000 38,500 221,500 Advertising expense 25,000 38,500 18,400 81,900 Depreciation expense—store equipment 10,800 15,000 12,000 37,800 Other operating expenses 28,200 28,540 35,600 92,340 Indirect operating expenses:         Store clerks’ wages expense 12,000 5,000 4,000 21,000 Advertising expense 7,000 2,000 1,000 10,000 Depreciation expense—store equipment 35,000 10,000 5,000 50,000 Store rent 60,000 20,000 20,000 100,000 Other operating expenses 25,500 4,500 18,450 48,450   Required: 1. (a) Prepare an income statement showing departmental operating income.   (b) Compute the gross profit percentage and operating income percentage for each department (round to the nearest tenth of a percent). 2. (a) Prepare an income statement showing departmental and total direct operating margins.   (b) Compute the departmental direct operating margin percentage for each department (round to the nearest tenth of a percent). 3. Should Bob be concerned about the profitability of the three departments? Should any of the departments be discontinued?     Income Statement     1. (a) Prepare an income statement showing departmental operating income. Additional Instruction   Bob’s Acme Supermarket Income Statement For Year Ended December 31, 20-- 1   Grocery Meat Produce Total 2           3           4           5           6           7           8           9           10           11           12                 2. (a) Prepare an income statement showing departmental and total direct operating margins. Additional Instruction   Bob’s Acme Supermarket Income Statement For Year Ended December 31, 20-- 1   Grocery Meat Produce Total 2           3           4           5           6           7           8           9           10           11           12           13           14           15           16           17           18           19                   Analysis     1. (b) Compute the gross profit percentage and operating income percentage for each department (round to the nearest tenth of a percent). Gross profit percentage:   Grocery   Meat   Produce   Operating income percentage:   Grocery   Meat   Produce     2. (b) Compute the departmental direct operating margin percentage for each department (round to the nearest tenth of a percent). Departmental direct operating margin percentage: Grocery   Meat   Produce     3. Should Bob be concerned about the profitability of the three departments? Bob should be concerned about the Produce Department   Bob should be concerned about the Grocery Department   Bod should not be concerned about any department   Bob should be concerned about the Meat Department     Should any of the departments be discontinued? Bob should discontinue the Meat Department   Bod should not discontinue any department   Bob should discontinue the Grocery Department   Bob should discontinue the Produce Department