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 $1,050,000 Purchasing Department 348,000 Other corporate administrative expenses 601,000 Total expense $1,999,000 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: Tech Services Purchasing Consumer Division 460 computers 6,100 purchase orders Commercial Division 290 11,300 Total 750 computers 17,400 purchase orders The support department allocations of the Tech Services Department and the Purchasing Department are considered controllable by the divisions. Corporate administrative expenses are not considered controllable by the divisions. The revenues, cost of goods sold, and operating expenses for the two divisions are as follows: Consumer Commercial Revenues $9,008,300 $7,323,900 Cost of goods sold 5,004,600 3,698,200 Operating expenses 1,767,000 1,830,800 Prepare the divisional income statements for the two divisions. Do not round your interim calculations.
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 $1,050,000 Purchasing Department 348,000 Other corporate administrative expenses 601,000 Total expense $1,999,000 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: Tech Services Purchasing Consumer Division 460 computers 6,100 purchase orders Commercial Division 290 11,300 Total 750 computers 17,400 purchase orders The support department allocations of the Tech Services Department and the Purchasing Department are considered controllable by the divisions. Corporate administrative expenses are not considered controllable by the divisions. The revenues, cost of goods sold, and operating expenses for the two divisions are as follows: Consumer Commercial Revenues $9,008,300 $7,323,900 Cost of goods sold 5,004,600 3,698,200 Operating expenses 1,767,000 1,830,800 Prepare the divisional income statements for the two divisions. Do not round your interim calculations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Prepare the divisional income statements for the two divisions. Do not round your interim calculations.
Horton Technology
Divisional Income Statements
For the Year Ended December 31, 20Y7
Consumer Division
Commercial Division
Operating income before support department allocations
Support department allocations:
Total support department allocations
Transcribed Image Text: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
$1,050,000
Purchasing Department
348,000
Other corporate administrative expenses
601,000
Total expense
$1,999,000
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:
Tech Services
Purchasing
Consumer Division
460 computers
6,100 purchase orders
Commercial Division
290
11,300
Total
750 computers
17,400 purchase orders
The support department allocations of the Tech Services Department and the Purchasing Department are considered controllable by the divisions. Corporate
administrative expenses are not considered controllable by the divisions. The revenues, cost of goods sold, and operating expenses for the two divisions are as follows:
Consumer
Commercial
Revenues
$9,008,300
$7,323,900
Cost of goods sold
5,004,600
3,698,200
Operating expenses
1,767,000
1,830,800
Prepare the divisional income statements for the two divisions. Do not round your interim calculations.
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