b. Correct the divisional income statements, using the activity bases provided in revising the service department charges. If an amount box does not require an entry, leave it blank, or enter "0". Do not round your interim calculations. WILD SUN AIRLINES INC. Divisional Income Statements For the Year Ended December 31, 20Y9 Rassenger Division Cargo Divieion
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- Corrections to service department charges Panda Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared The service department charge rate for the service department costs was based on revenues. The following additional information is available a.Does the operating income for the two divisions accurately measure performance? b.Using service charge rates for service department charges, correct the divisional income statements.Profit center responsibility reporting for a service company Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31: The company operates three support departments: Shareholder Relations, Customer Support, and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company. The Customer Support Department is the companys point of contact for new service, complaints, and requests for repair. The department believes that the number of customer contacts is a cost driver for this work. The Legal Department provides legal services for division management. The department believes that the number of hours billed is a cost driver for this work. The following additional information has been gathered: Instructions 1. Prepare quarterly income statements showing operating income for the three divisions. Use three column headings: East, West, and Central. 2. Identify the most successful division according to the profit margin. Round to the nearest whole percent. 3. Provide a recommendation to the CEO for a better method for evaluating the performance of the divisions. In your recommendation, identify the major weakness of the present method.Profit center responsibility reporting On-Demand Sports Co. operates two divisions—the Action Sports Division and the Team Sports Division. The following income and expense accounts were provided as of November 30. 20Y1, the end of the current fiscal year, after all adjustments, including those for inventories, were recorded The bases to be used in allocating expenses, together with other essential information, are as follows a.Advertising expense—incurred al headquarters, charged back to divisions on the basis of usage: Action Sports Division. $1,200,000; Team Sports Division, $1,800,000. b. Transportation expense—charged hack lo divisions at a charge rale of $18.50 per bill of lading: Action Sports Division, 14.000 bills of lading; Team Sports Division. 21.400 bills of lading. C. Accounts receivable collection expense—incurred al headquarters, charged back to divisions at a charge rate of $9-00 per invoice: Action Sports Division. 32.000 sales invoices; Team Sports Division, 12.500 sales invoices. d. Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Action Sports Division. 120.000 square feet; Team Sports Division. 80.000 square feet. Prepare divisional income statements with two column headings: Action Sports Division and Team Sports Division. Provide supporting schedules for determining service department charges.
- Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: The bases to be used in allocating expenses, together with other information, are as follows: a. Advertising expenseincurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, 375,000; Summer Sports Division, 715,000. b. Transportation expenseallocated to divisions at a rate of 4.00 per bill of lading: Winter Sports Division, 17,500 bills of lading; Summer Sports Division, 30,500 bills of lading. c. Accounts receivable collection expenseincurred at headquarters, allocated to divisions at a rate of 1.00 per invoice: Winter Sports Division, 25,000 sales invoices; Summer Sports Division, 43,000 sales invoices. d. Warehouse expenseallocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 60,000 square feet; Summer Sports Division, 90,000 square feet. Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Provide supporting computations for support department allocations.INCOME STATEMENT WITH DEPART MENTAL GROSS PROFIT AND OPERATING INCOME Thomas and Hill Distributors has divided its business into two departments: commercial sales and industrial sales. The following information is provided for the year ended December 31, 20--: REQUIRED 1. Prepare an income statement showing departmental gross profit and total operating income. 2. Calculate departmental gross profit percentages.Corrections to Service Department Charges for a Service Company Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: Wild Sun Airlines Inc.Divisional Income StatementsFor the Year Ended December 31, 20Y9 Passenger Division Cargo Division Revenues $3,025,000 $3,025,000 Operating expenses 2,450,000 2,736,000 Income from operations beforeservice department charges $575,000 $289,000 Less service department charges: Training $125,000 $125,000 Flight scheduling 108,000 108,000 Reservations 151,200 384,200 151,200 384,200 Income from operations $190,800 $(95,200) The service department charge rate for the service department costs was based on revenues. Because the revenues of the two divisions were the same, the service department charges to each division were also the same. The following additional…
- Profit Center Responsibility Reporting A-One Freight Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31, 20Y3. Revenues—Air Division $ 1,086,300 Revenues—Rail Division 1,307,900 Revenues—Truck Division 2,315,700 Operating Expenses—Air Division 688,400 Operating Expenses—Rail Division 778,400 Operating Expenses—Truck Division 1,400,400 Corporate Expenses—Shareholder Relations 165,200 Corporate Expenses—Customer Support 546,000 Corporate Expenses—Legal 262,400 General Corporate Officers’ Salaries 364,900 The company operates three service departments: Shareholder Relations, Customer Support, and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company. The Customer Support Department…Show in excel formatWild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: WILD SUN AIRLINES INC. Divisional Income Statements For the Year Ended December 31, 20Y9 1 Passenger Division Cargo Division 2 Revenues $3,025,000.00 $3,025,000.00 3 Operating expenses 2,450,000.00 2,736,000.00 4 Income from operations before service department charges $575,000.00 $289,000.00 5 Less service department charges: 6 Training $125,000.00 $125,000.00 7 Flight scheduling 108,000.00 108,000.00 8 Reservations 151,200.00 151,200.00 9 Total service department charges $384,200.00 $384,200.00 10 Income from operations $190,800.00 $(95,200.00) The service department charge rate for the service department costs was based on revenues. Because the revenues of the two…
- Divisional Income Statements The following data were summarized from the accounting records for South Seas Coast Construction Company for the year ended June 30, 20Y8: Cost of goods sold: Service department charges: Commercial Division $551,130 Commercial Division $75,150 Residential Division 280,570 Residential Division 48,600 Administrative expenses: Sales: Commercial Division $100,200 Commercial Division $835,040 Residential Division 100,200 Residential Division 501,020 Prepare divisional income statements for South Seas Coast Construction Company. South Seas Coast Construction Company Divisional Income Statements For the Year Ended June 30, 20Y8 CommercialDivision ResidentialDivisionDivisional Income Statements The following data were summarized from the accounting records for Jersey Coast Construction Company for the year ended June 30, 20Y8: Cost of goods sold: Service department charges: Commercial Division $348,510 Commercial Division $47,520 Residential Division 171,510 Residential Division 29,710 Administrative expenses: Net sales: Commercial Division $63,370 Commercial Division $528,050 Residential Division 61,250 Residential Division 306,270 Prepare divisional income statements for Jersey Coast Construction Company. Jersey Coast Construction Company Divisional Income Statements For the Year Ended June 30, 20Y8 Commercial Division Residential Division Income from operations before service department charges $fill in the blank 2 $fill in the blank 3 Cost of goods sold fill in the blank 5 fill in the blank 6 Gross profit $fill in the blank 8 $fill in the blank 9 Administrative…Profit center responsibility reporting for a service company Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31: Revenues—East $1,400,000 Revenues—West 2,000,000 Revenues—Central 3,200,000 Operating Expenses—East 800,000 Operating Expenses—West 1,350,000 Operating Expenses—Central 1,900,000 Corporate Expenses—Shareholder Relations 300,000 Corporate Expenses—Customer Support 320,000 Corporate Expenses—Legal 500,000 General Corporate Officers' Salaries 1,200,000 The company operates three support departments: Shareholder Relations, Customer Support, and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company. The Customer Support Department is the company’s point…