Pink Company operates a store with two departments: Videos and Music. Information about those departments follows: Videos Music Sales $370,500 $279,500 Cost of Goods Sold 320,000 175,000 Operating Expenses: Salaries 35,000 25,000 Maintenance 12,000 10,000 Utilities 5,000 4,500 Insurance 4,200 3,700 The company also incurred the following service department charges: Advertising $15,000 Salaries 27,000 Office Expenses 3,200 Service department charges are allocated to the departments as follows: advertising on the basis of sales; salaries on the basis of number of employees; and office expenses on the basis of square footage. Additional information about the departments follows: Department Square Footage Number of Employees Videos 5,000 3 Music 3,000 2 Directions: Use the above information to prepare a Divisional Income Statement for Pink Company for the year ended December 31, 2019.
Pink Company operates a store with two departments: Videos and Music. Information about those departments follows: Videos Music Sales $370,500 $279,500 Cost of Goods Sold 320,000 175,000 Operating Expenses: Salaries 35,000 25,000 Maintenance 12,000 10,000 Utilities 5,000 4,500 Insurance 4,200 3,700 The company also incurred the following service department charges: Advertising $15,000 Salaries 27,000 Office Expenses 3,200 Service department charges are allocated to the departments as follows: advertising on the basis of sales; salaries on the basis of number of employees; and office expenses on the basis of square footage. Additional information about the departments follows: Department Square Footage Number of Employees Videos 5,000 3 Music 3,000 2 Directions: Use the above information to prepare a Divisional Income Statement for Pink Company for the year ended December 31, 2019.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pink Company operates a store with two departments: Videos and Music. Information about those departments follows:
| Videos | Music | |
| Sales | $370,500 | $279,500 |
| Cost of Goods Sold | 320,000 | 175,000 |
| Operating Expenses: | ||
|
Salaries |
35,000 | 25,000 |
| Maintenance | 12,000 | 10,000 |
| Utilities | 5,000 | 4,500 |
| Insurance | 4,200 | 3,700 |
The company also incurred the following service department charges:
| Advertising | $15,000 |
| Salaries | 27,000 |
| Office Expenses | 3,200 |
Service department charges are allocated to the departments as follows: advertising on the basis of sales; salaries on the basis of number of employees; and office expenses on the basis of square footage. Additional information about the departments follows:
| Department | Square Footage | Number of Employees |
| Videos | 5,000 | 3 |
| Music | 3,000 | 2 |
Directions: Use the above information to prepare a Divisional Income Statement for Pink Company for the year ended December 31, 2019.
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