Operating income for profit centerThe centralized Data Analytics Department of Drewlink Company has expenses of $340,000. The department has provided a total of 8,000 hours of service for the period.The Retail Division has used 2,000 hours of data analytics service during the period, and the Commercial Division has used 6,000 hours of data analytics service.Additional data for the two divisions is following below:Retail DivisionCommercial DivisionSalesCost of goods sold$2,550,0001,450,000$1,700,000-750,000230,000170,000Selling expensesDetermine the divisional operating income for the Retail Division and the Commercial Division. Do not round interim calculations.Drewlink CompanyDivisional Operating incomeLine Item DescriptionRetail Division Commercial DivisionSalesCost of goods soldSupport department allocationsXOperating incomeFeedback

Step 1: Given that, Centralized data analytics expenses = $340,000 Total Service hours = 8,000…

Answered: Operating income for profit center The…

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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Garcia Company has two operating departments (Phone and Earbuds) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses. GARCIA COMPANY Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Sales salaries Supplies used Depreciation-Equipment Rent Utilities Share of office department expenses Total expenses Income Phone Earbuds Combined $ 200,000 98,000 $ 95,000 $ 295,000 58,900 102,000 36,100 156,900 138,100 20,000 8,700 28,700 1,150 450 1,600 2,100 300 2,400 7,060 3,840 10,900 2,700 1,800 4,500 10,500 4,500 43,510 19,590 $ 58,490 $ 16,510 15,000 63,100 $ 75,000 Required: Prepare a departmental contribution to overhead report. Garcia Company Departmental Contribution to Overhead For Year Ended December 31 Gross profit Direct expenses Phone Earbuds Combined 0 0 0 Total direct expenses 0 0 0 Departmental…
Using the following data for Ace Guitar Company: A Region Sales Cost of goods sold Selling expenses Support department expenses: Purchasing Payroll accounting $781,000 296,800 187,400 A Region Operating Income B Region Operating Income B Region $639,000 242,800 153,400 $238,600 159,000 Allocate support department expenses proportional to the sales of each region. Determine the divisional operating income for the A and B regions.
Profit Center Responsibility Reporting Glades Sporting Goods Co. 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, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales—Winter Sports Division $12,600,000 Sales—Summer Sports Division 16,300,000 Cost of Goods Sold—Winter Sports Division 7,560,000 Cost of Goods Sold—Summer Sports Division 9,454,000 Sales Expense—Winter Sports Division 2,016,000 Sales Expense—Summer Sports Division 2,282,000 Administrative Expense—Winter Sports Division 1,260,000 Administrative Expense—Summer Sports Division 1,450,700 Advertising Expense 578,000 Transportation Expense 265,660 Accounts Receivable Collection Expense 174,000 Warehouse Expense 1,540,000 The bases to be used in allocating expenses, together with other essential…
Crane Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $ 210,600 and the following divisional results. Division I II III IV Sales $ 245,000 $ 197,000 $ 504,000 $ 450,000 Cost of goods sold 200,000 192,000 301,000 249,000 Selling and administrative expenses 72,400 63,000 58,000 50,000 Income (loss) from operations $ ( 27,400) $ ( 58,000) $ 145,000 $ 151,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 73 % 91 % 82 % 75 % Selling and administrative expenses 39 59 50 61 Discontinuance of any division would save 50% of the fixed costs and expenses for that division.Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the…
Divisional Income Statements The following data were summarized from the accounting records for Ruiz Industries Inc. for the year ended November 30, 20Y8: Cost of goods sold: Support department allocations: Commercial Division $459,310 Commercial Division $62,630 Residential Division 214,350 Residential Division 37,130 Administrative expenses: Sales: Commercial Division $83,510 Commercial Division $695,920 Residential Division 76,550 Residential Division 382,760 Prepare divisional income statements for Ruiz Industries Inc. Ruiz Industries Inc. Divisional Income Statements For the Year Ended November 30, 20Y8 Commercial Division Residential Division %24
Using the data below for the Ace Guitar Company: A Region B Region Sales $521,500 $968,500 Cost of goods sold 198,200 368,000 Selling expenses 125,200 232,400 Service department expenses Purchasing $250,300 Payroll accounting 166,900 Allocate service department expenses proportional to the sales of each region. Determine the divisional income from operations for the A and B regions. For interim calculations, round percentages to one decimal place. A Region $ B Region $
Darby Company, operating at full capacity, sold 129,600 units at a price of $123 per unit during the current year. Its income statement is as follows: Sales $15,940,800 Cost of goods sold 5,658,000 Gross profit $10,282,800 Expenses: Selling expenses $2,829,000 Administrative expenses 1,681,000 Total expenses 4,510,000 Income from operations $5,772,800 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,476,000 in yearly sales. The expansion will increase fixed costs by $196,800, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs $fill in the blank 1…
Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: WILD SUN AIRLINES INC. Divisional Income Statements For the Year Ended December 31, 20Y9 1 Passenger Division Cargo Division 2 Revenues $3,025,000.00 $3,025,000.00 3 Operating expenses 2,450,000.00 2,736,000.00 4 Income from operations before service department charges $575,000.00 $289,000.00 5 Less service department charges: 6 Training $125,000.00 $125,000.00 7 Flight scheduling 108,000.00 108,000.00 8 Reservations 151,200.00 151,200.00 9 Total service department charges $384,200.00 $384,200.00 10 Income from operations $190,800.00 $(95,200.00) The service department charge rate for the service department costs was based on revenues. Because the revenues of the two…
Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Operating income Operating assets Retail Division $ 7,200,000 $37,200,000 Wholesale Division $ 3,700,000 $17,200,000 Assuming that these are the only divisions of Terra Company, what is the ROI for the company as a whole?
The vice president of operations of Scott Hall and Associates is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Category Road Bike Division Mountain Bike Division Sales $1,750,000 $1,810,000 Cost of goods sold 1,300,000 1,440,000 Operating expenses 202,000 236,800 Invested assets 1,400,000 800,000 Prepare condensed divisional income statements for the year ended December 31, 2021, assuming that there were no service department charges. Using the DuPont formula for return on investment, determine the profit margin percentage, investment turnover, and return on investment for each division. (Round percentages and the investment turnover to two places behind the decimal.) If management’s minimum acceptable return on investment is 10%, determine the residual income for each division. In your own words…
Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Retail Division Wholesale Division Operating income $ 2,750,000 $ 6,250,000 Operating assets $ 18,500,000 $ 38,500,000 Terra Company has set a target return on investment (ROI) of 14% for both divisions. Which of the following statements is accurate? Residual income for the wholesale division was $160,000. Residual income for the wholesale division was $860,000. Residual income for the retail division was $860,000. None of these answers are correct.
The vice president of operations of Recycling Industries is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Business Division Consumer Division Sales $2,100,000 $2,480,000 Cost of goods sold 1,250,000 1,330,000 Operating expenses 598,000 827,600 Invested assets 750,000 2,066,667 Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y8, assuming that there were no service department charges. 2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. If required, round your answers to one decimal place. 3. If management desires a minimum acceptable return on investment of 19.00%, determine the residual income for each division. Use the minus sign to indicate a negative income. Round your…

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