Lilac Group is organized into two geographic divisions (Americas and Rest of the World, or ROW) and a corporate headquarters. Late last year, the Lilac CFO prepared financial operating plans (budgets) for the two divisions for the current year, shown as follows: Revenues Direct division costs Operating profit before allocation Americas $ 60,300,000 48,240,000 $ 12,060,000 ROW $ 73,700,000 51,590,000 $ 22,110,000 Corporate overhead costs are expected to be $10.8 million in the current year. Of the $10.8 million, $6.9 million is fixed, and the remainder is variable, with respect to revenue. Division managers are evaluated and compensated in part on division operating profit relative to the budget. Required: a. Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits in each division for the current year after the corporate costs are allocated? b. At the end of the current year, actual corporate costs incurred were $12.0 million. Of the $12.0 million, $7.0 was fixed. Actual results in the two divisions are as follows: Revenues Direct costs Americas $ 60,300,000 48,240,000 ROW $ 90,450,000 64,220,000 Operating profit before allocation $ 12,060,000 $ 26,230,000 What are the operating profits in each division for the current year after the corporate costs are allocated? Complete this question by entering your answers in the tabs below. Required A Required B Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits in each division for the current year after the corporate costs are allocated? Note: Do not round intermediate calculations. Enter your answers in thousands of dollars. Revenues Direct coete Americas ROW Total $ 0 C
Lilac Group is organized into two geographic divisions (Americas and Rest of the World, or ROW) and a corporate headquarters. Late last year, the Lilac CFO prepared financial operating plans (budgets) for the two divisions for the current year, shown as follows: Revenues Direct division costs Operating profit before allocation Americas $ 60,300,000 48,240,000 $ 12,060,000 ROW $ 73,700,000 51,590,000 $ 22,110,000 Corporate overhead costs are expected to be $10.8 million in the current year. Of the $10.8 million, $6.9 million is fixed, and the remainder is variable, with respect to revenue. Division managers are evaluated and compensated in part on division operating profit relative to the budget. Required: a. Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits in each division for the current year after the corporate costs are allocated? b. At the end of the current year, actual corporate costs incurred were $12.0 million. Of the $12.0 million, $7.0 was fixed. Actual results in the two divisions are as follows: Revenues Direct costs Americas $ 60,300,000 48,240,000 ROW $ 90,450,000 64,220,000 Operating profit before allocation $ 12,060,000 $ 26,230,000 What are the operating profits in each division for the current year after the corporate costs are allocated? Complete this question by entering your answers in the tabs below. Required A Required B Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits in each division for the current year after the corporate costs are allocated? Note: Do not round intermediate calculations. Enter your answers in thousands of dollars. Revenues Direct coete Americas ROW Total $ 0 C
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Ashvin
Transcribed Image Text:Lilac Group is organized into two geographic divisions (Americas and Rest of the World, or ROW) and a corporate headquarters. Late
last year, the Lilac CFO prepared financial operating plans (budgets) for the two divisions for the current year, shown as follows:
Revenues
Direct division costs
Operating profit before allocation
Americas
$ 60,300,000
48,240,000
$ 12,060,000
ROW
$ 73,700,000
51,590,000
$ 22,110,000
Corporate overhead costs are expected to be $10.8 million in the current year. Of the $10.8 million, $6.9 million is fixed, and the
remainder is variable, with respect to revenue. Division managers are evaluated and compensated in part on division operating profit
relative to the budget.
Required:
a. Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits
in each division for the current year after the corporate costs are allocated?
b. At the end of the current year, actual corporate costs incurred were $12.0 million. Of the $12.0 million, $7.0 was fixed. Actual results
in the two divisions are as follows:
Revenues
Direct costs
Americas
$ 60,300,000
48,240,000
ROW
$ 90,450,000
64,220,000
Operating profit before allocation
$ 12,060,000
$ 26,230,000
What are the operating profits in each division for the current year after the corporate costs are allocated?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating
profits in each division for the current year after the corporate costs are allocated?
Note: Do not round intermediate calculations. Enter your answers in thousands of dollars.
Revenues
Direct coete
Americas
ROW
Total
$
0
C
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