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 $773,500 Purchasing Department 308,000 Other corporate administrative expenses 465,000 Total expense $1,546,500 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 400 computers 5,400 purchase orders Commercial Division 250 10,000 Total 650 computers 15,400 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 $6,868,100 $5,765,300 Cost of goods sold 3,815,600 2,911,200 Operating expenses 1,347,200 1,441,200 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 $ $ $ $

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 $773,500 Purchasing Department 308,000 Other corporate administrative expenses 465,000 Total expense $1,546,500 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 400 computers 5,400 purchase orders Commercial Division 250 10,000 Total 650 computers 15,400 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 $6,868,100 $5,765,300 Cost of goods sold 3,815,600 2,911,200 Operating expenses 1,347,200 1,441,200 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 $ $ $ $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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	$773,500
Purchasing Department	308,000
Other corporate administrative expenses	465,000
Total expense	$1,546,500

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	400	computers	5,400	purchase orders
Commercial Division	250		10,000
Total	650	computers	15,400	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	$6,868,100		$5,765,300
Cost of goods sold	3,815,600		2,911,200
Operating expenses	1,347,200		1,441,200

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	$	$
	$	$

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