Brooks Company has three divisions - Northwest, South, and East. The followingsegmented financial information is for the most recent fiscal year ended December 31.SalesNorthwest Division$22,000,00010,000,0004,125,000South DivisionEast Division$18,000,000Cost of goods soldAllocated overheadSelling and administrative expenses 5,000,000$8,000,0002,000,0001,500,0003,200,0007,000,0003,375,0005,000,000In addition, the average operating assets totaled $15,000,000 for the Northwest Division,$6,500,000 for the South division, and $14,000,000 for the East division. Also, the cost ofcapital is 16 percent. The corporate tax rate is 30%.Required:You have been hired, an expert in financial analysis, to evaluate the operating performance ofthe three divisions. What division is performing the best? What division is performing the worst?

Here's a detailed explanation for better understanding. Operating IncomeThe operating income is a…

Answered: Brooks Company has three divisions -…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 5E: Service department charges In divisional income statements prepared for Demopolis Company, the...

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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.
Divisional Income Statements The following data were summarized from the accounting records for Ruiz Industries Inc. for the year ended November 30, 20Y8: Cost of goods sold: Support department allocations: Commercial Division $3,400,000 Commercial Division $800,000 Residential Division 1,800,000 Residential Division 200,000 Administrative expenses: Sales: Commercial Division $750,000 Commercial Division $6,120,000 Residential Division 375,000 Residential Division 2,850,000 Prepare divisional income statements for Ruiz Industries Inc. Ruiz Industries Inc.Divisional Income StatementsFor the Year Ended November 30, 20Y8 Commercial Division Residential Division $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select - - Select - $- Select - $- Select -
Divisional Income Statements The following data were summarized from the accounting records for Ruiz Industries Inc. for the year ended November 30, 20Y8: Cost of goods sold: Support department allocations: Commercial Division $459,310 Commercial Division $62,630 Residential Division 214,350 Residential Division 37,130 Administrative expenses: Sales: Commercial Division $83,510 Commercial Division $695,920 Residential Division 76,550 Residential Division 382,760 Prepare divisional income statements for Ruiz Industries Inc. Ruiz Industries Inc. Divisional Income Statements For the Year Ended November 30, 20Y8 Commercial Division Residential Division %24
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 $422,110 Commercial Division $57,560 Residential Division 218,470 Residential Division 37,840 Administrative expenses: Net sales: Commercial Division $76,750 Commercial Division $639,560 Residential Division 78,030 Residential Division 390,130 Prepare divisional income statements for Jersey Coast Construction Company. Jersey Coast Construction CompanyDivisional Income StatementsFor the Year Ended June 30, 20Y8 Commercial Division Residential Division $Net sales $Net sales Cost of goods sold Cost of goods sold $Gross profit $Gross profit Administrative expenses Administrative expenses $Income from operations before service department charges $Income from operations before service department charges…
Divisional 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…
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: Commercial Division $916,250 Residential Division 450,675 Administrative expenses: Commercial Division $149,200 Residential Division 128,800 Service department charges: Commercial Division $112,740 Residential Division 68,850 Sales: Commercial Division $1,360,500 Residential Division 749,500 Prepare divisional income statements for Jersey Coast Construction Company. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. X Amount Descriptions Amount Descriptions Administrative expenses Cost of goods sold Gross profit Income from operations Income from operations before service department charges Sales Selling expenses Service department charges…
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 ResidentialDivision
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 $331,840 Commercial Division $45,250 Residential Division 163,310 Residential Division 28,290 Administrative expenses: Net sales: Commercial Division $60,330 Commercial Division $502,790 Residential Division 58,320 Residential Division 291,620 Prepare divisional income statements for DeSalvo Construction Company. JERSEY COAST CONSTRUCTION COMPANY Divisional Income Statements For the Year Ended June 30, 20Y8 Commercial Division Residential Division $ $ $ $ $ $ $ $
Divisional income statements with support department allocations Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments, Tech Services and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Services Department $1,158,300 480,000 Purchasing Department Other corporate administrative expenses 704,000 $2,342,300 Total expense The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech Services Department allocates costs to the divisions based on the number of computers in the department, and the Purchasing Department allocates costs to the divisions based on the number of purchase orders for each department. The services used by the two divisions are as follows: Consumer Division Commercial Division Total Tech Services 500 computers 310 810 computers Purchasing 5,600 purchase orders 10,400 16,000 purchase orders The support department…
Selected data for Miller Company, which operates three departments, follow: Department A Department B Department C Inventory $120,000 $432,000 $168,000 Equipment (average cost) $1,080,000 $648,000 $432,000 Payroll $810,000 $720,000 $270,000 Square feet of floor space 18,000 9,000 3,000 During the year, the company's fixed expenses included the following: Depreciation on equipment $120,000 Real estate taxes 36,000 Personal property taxes (on inventory and equipment) 57,600 Personnel department expenses 40,000 Assume that the property tax rate is the same for both inventory and equipment. Using the most causally related bases, prepare a schedule assigning the fixed expenses to the three departments. Hint: Not all fixed expenses are traceable to the three departments. One of these fixed costs should be considered a common cost and not traceable to the departments. Do not round until your final answer. Round final…
Garcia Company has two operating departments (Phone and Earbuds) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses. GARCIA COMPANY Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Sales salaries Supplies used Depreciation-Equipment Rent Utilities Share of office department expenses Total expenses Income Phone Earbuds Combined $ 200,000 98,000 $ 95,000 $ 295,000 58,900 102,000 36,100 156,900 138,100 20,000 8,700 28,700 1,150 450 1,600 2,100 300 2,400 7,060 3,840 10,900 2,700 1,800 4,500 10,500 4,500 43,510 19,590 $ 58,490 $ 16,510 15,000 63,100 $ 75,000 Required: Prepare a departmental contribution to overhead report. Garcia Company Departmental Contribution to Overhead For Year Ended December 31 Gross profit Direct expenses Phone Earbuds Combined 0 0 0 Total direct expenses 0 0 0 Departmental…
Service Department Charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $32,536, and the Purchasing Department had expenses of $14,500 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $ 303,000 $ 402,000 $ 922,000 Number of employees: Weekly payroll (52 weeks per year) 125 80 85 Monthly payroll 30 41 28 Number of purchase requisitions per year 2,100 1,500 1,400 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential…

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