## Horton Technology: Divisional Income Statements with Support Department AllocationsHorton Technology has two divisions, Consumer and Commercial, along with two corporate support departments: Tech Services and Purchasing. The corporate expenses for the year ending December 31, 2017, are detailed below:### Corporate Expenses for the Year- **Tech Services Department:** $1,170,000- **Purchasing Department:** $450,000- **Other Corporate Administrative Expenses:** $800,000- **Total Expenses:** $2,420,000The other corporate administrative expenses include officers’ salaries and various other expenses mandated by the corporation. Costs are allocated by the Tech Services Department based on the number of computers used by each division, while the Purchasing Department allocates costs based on the number of purchase orders processed.### Services Used by Divisions- **Tech Services:** - Consumer Division: 1,100 computers - Commercial Division: 700 computers- **Purchasing:** - Consumer Division: 4,000 purchase orders - Commercial Division: 8,000 purchase orders**Overall Totals:**- **Total Computers:** 1,800- **Total Purchase Orders:** 12,000The costs allocated from the Tech Services Department and the Purchasing Department are considered controllable by the respective divisions. Corporate administrative expenses are not considered under the divisions' control. Provided below are revenues, costs of goods sold, and operating expenses for each division:### Financial Overview- **Consumer Division:** - Revenues: $15,500,000 - Cost of Goods Sold: $10,000,000 - Operating Expenses: $3,000,000- **Commercial Division:** - Revenues: $33,250,000 - Cost of Goods Sold: $18,500,000 - Operating Expenses: $1,750,000### Instructions for Income Statement PreparationPrepare the divisional income statements using these details, and ensure that all interim calculations are rounded to three decimal places as needed.### Template for Income Statement| Line Item Description | Consumer Division | Commercial Division ||------------------------------------------------------------|-------------------|---------------------|| **Operating Income Before Support Department Allocations** | | || **Support Department Allocations:** | | || - Total Support Department Allocations | | || **Total

A divisional income statement summarises the financial performance of an operating unit inside your…

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, 2017, are as follows: Tech Services Department Purchasing Department Other corporate administrative expenses 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 e department. The services used by the two divisions are as follows: Consumer Division Commercial Division Total Revenues Cost of goods sold Operating expenses Tech Services $1.170.000 450.000 800.000 $2.420.000 1.100 computers 700 1.800 computers 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: Line Item Description Consumer $15.500.000 10.000.000 3.000.000 Purchasing 4.000 purchase orders 8.000 12.000 purchase orders Prepare the divisional income statements for the two divisions. Round your interim calculations to three decimal places, if required. Horton Technology Commercial $33.250.000 15.800.000 1,750,000 Divisional Income Statements For the Year Ended December 31, 2017 Total support department allocations Operating income before support department allocations Support department allocations 31000101000011 3000 100000 Consumer Commercial Division Division

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q