Championship Sports Inc. operates two divisions—the 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: Sales—Winter Sports Division $34,020,000 Sales—Summer Sports Division 37,584,000 Cost of Goods Sold—Winter Sports Division 20,412,000 Cost of Goods Sold—Summer Sports Division 21,708,000 Sales Expense—Winter Sports Division 5,832,000 Sales Expense—Summer Sports Division 5,184,000 Administrative Expense—Winter Sports Division 3,402,000 Administrative Expense—Summer Sports Division 3,337,200 Advertising Expense 997,000 Transportation Expense 438,200 Accounts Receivable Collection Expense 211,400 Warehouse Expense 3,240,000 The bases to be used in allocating expenses, together with other information, are as follows: Advertising expense—incurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $468,000; Summer Sports Division, $529,000. Transportation expense—allocated to divisions at a rate of $14 per bill of lading: Winter Sports Division, 14,900 bills of lading; Summer Sports Division, 16,400 bills of lading. Accounts receivable collection expense—incurred at headquarters, allocated to divisions at a rate of $7 per invoice: Winter Sports Division, 13,900 sales invoices; Summer Sports Division, 16,300 sales invoices. Warehouse expense—allocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 160,000 square feet; Summer Sports Division, 200,000 square feet. Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.

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 9E: Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports...

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Championship Sports Inc. operates two divisions—the 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:

Sales—Winter Sports Division	$34,020,000
Sales—Summer Sports Division	37,584,000
Cost of Goods Sold—Winter Sports Division	20,412,000
Cost of Goods Sold—Summer Sports Division	21,708,000
Sales Expense—Winter Sports Division	5,832,000
Sales Expense—Summer Sports Division	5,184,000
Administrative Expense—Winter Sports Division	3,402,000
Administrative Expense—Summer Sports Division	3,337,200
Advertising Expense	997,000
Transportation Expense	438,200
Accounts Receivable Collection Expense	211,400
Warehouse Expense	3,240,000

The bases to be used in allocating expenses, together with other information, are as follows:

Advertising expense—incurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $468,000; Summer Sports Division, $529,000.
Transportation expense—allocated to divisions at a rate of $14 per bill of lading: Winter Sports Division, 14,900 bills of lading; Summer Sports Division, 16,400 bills of lading.
Accounts receivable collection expense—incurred at headquarters, allocated to divisions at a rate of $7 per invoice: Winter Sports Division, 13,900 sales invoices; Summer Sports Division, 16,300 sales invoices.
Warehouse expense—allocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 160,000 square feet; Summer Sports Division, 200,000 square feet.

Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.

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