REFERENCE: Ref.05_05 Gargiulo Company,a 90% Owned Subsidiary of Posito Corporation,sells Inventory to Inventory
REFERENCE: Ref.05_05
Gargiulo Company,a 90% owned subsidiary of Posito Corporation,sells inventory to Posito at a 25% profit on selling price.The following data are available pertaining to intercompany purchases.Gargiulo was acquired on January 1,2009.
Assume the equity method is used.The following data are available pertaining to Gargiulo's income and dividends.
-Compute the income from Gargiulo reported on Posito's books for 2011.
Definitions:
Selling Commission
A fee paid to a salesperson or agent for facilitating a sale, typically a percentage of the sale price.
Operating Leverage
A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.
Variable Expenses
Expenses that fluctuate with changes in production volume or business activity levels, including materials, labor, and utilities.
Contribution Margin
The difference between sales revenue and variable costs, used to cover fixed costs and contribute to profit.
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