Divisional income statements with support department allocationsHorton 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 DepartmentPurchasing DepartmentOther corporate administrative expenses$2,132,400The 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 ServicesPurchasingConsumer Division480 computers5,800 purchase ordersCommercial Division30010,8004780 computers16,600 purchase ordersThe 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:ConsumerCommercial$9,495,2005,275,1001,862,500Total expenseTotalRevenuesCost of goods sold$1,076,400415,000641,000Line Item Description$7,926,700Operating expenses1,981,500Prepare the divisional income statements for the two divisions. Do not round your interim calculations.Horton Technology4,002,600Divisional Income StatementsFor the Year Ended December 31, 20Y7Total support department allocationsOperating income before support department allocationsSupport department allocations:Consumer CommercialDivisionDivision10000

It is a fundamental accounting practice that helps organizations determine the true cost of their…

repare 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, 2017 Line Item Description Operating income before support department allocations Support department allocations: Total support department allocations Consumer Commercial Division Division gogo goog gooodl godo

repare 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, 2017 Line Item Description Operating income before support department allocations Support department allocations: Total support department allocations Consumer Commercial Division Division gogo goog gooodl godo

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Subject: accounting
Service Department Charges In divisional income statements prepared for LeFevre Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $63,492, and the Purchasing Department had expenses of $26,840 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $561,000 $743,000 $1,707,000 Number of employees: Weekly payroll (52 weeks per year) 205 85 90 Monthly payroll 36 47 34 Number of purchase requisitions per year 2,600 1,800 1,700 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential Commercial…
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…
Profit Center Responsibility Reporting for a Service Company Thomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions, as profit centers. The chief executive officer (CEO) evaluates divisional performance, using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31: Revenues—N Region $1,027,800 Revenues—S Region 1,251,100 Revenues—W Region 2,070,600 Operating Expenses—N Region 651,300 Operating Expenses—S Region 744,600 Operating Expenses—W Region 1,252,200 Corporate Expenses—Dispatching 455,000 Corporate Expenses—Equipment Management 295,000 Corporate Expenses—Treasurer’s 156,300 General Corporate Officers’ Salaries 345,200 The company operates three support departments: the Dispatching Department, the Equipment Management Department, and the Treasurer’s Department. The Dispatching Department manages the scheduling and…
Cost Department Allocations In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $64,560, and the Purchasing Department had expenses of $40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial Government Contract Sales $2,000,000 $3,250,000 $2,900,000 Number of employees: Weekly payroll (52 weeks per year) 400 250 150 Monthly payroll 80 30 10 Number of purchase requisitions per year 7,500 3,000 2,000 Required: a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential…
[The following information applies to the questions displayed below.] National Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. Rent Advertising Insurance Total $ 45,000 25,000 10,000 $ 80,000 The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $80,000 of indirect expenses by 4,000 square feet to find an average cost of $20 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied. The company now wants to allocate indirect expenses using the allocation bases shown below. Department Housewares Sporting Total Square Feet 1,440 2,560 4,000 Sales $ 370,000 130,000 $ 500,000 Value of Insured Assets $59,000 41,000 $ 100,000 Required: 1. Allocate indirect expenses to the two departments using the allocation method used in prior periods.
1. Show the amount of the 2020 advertising cost ($1,500,000) that would be allocated to each of the divisions under the following criteria: a. Dobbins'allocation method based on actual number of cars sold b. The stand-alone method based on the amounts divisions would have spent on their own advertising c. The incremental-allocation method, with divisions ranked on the basis of dollars they would have spent on advertising in 2020 2. Which method do you think is most equitable to the divisional sales managers? What other options might President Doug Dobbinshave for allocating the advertising costs? More Information: The manager of the East sales location, Mike Samson, was not happy. He complained that the new allocation method was unfair and increased his advertising costs significantly. The East location sold high volumes of low-priced used cars and most of the corporate advertising budget related to new car sales.
Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company 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: Mountain Bike Division Road Bike Division Sales Cost of goods sold Operating expenses Invested assets Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations. Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 20Y7 Sales Cost of goods sold Gross profit Operating expenses Operating income $ Road Bike Division Road Bike Division $3,410,000 1,500,000 1,330,300 3,100,000 $ Road Bike Division Mountain Bike Division 2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and rate of return on investment for each division. If…
Show in excel format
Owen Audio shows the following information for its two divisions for year 1. Commercial Division Sales revenue Cost of sales Consumer Division $ 1,840,800 1,104,480 $ 5,829,200 3,781,100 Selling, General and Administrative Allocated corporate overhead 277,400 350,840 128,760 407,740 Required: a. Compute divisional operating income for the two divisions. Ignore taxes. b-1. What are the gross margin and operating margin percentages for both divisions? b-2. How well have these divisions performed?
Carry On Freight Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31, 20Y3. Revenues—Air Division $ 935,800 Revenues—Rail Division 1,110,300 Revenues—Truck Division 2,025,500 Operating Expenses—Air Division 593,000 Operating Expenses—Rail Division 660,800 Operating Expenses—Truck Division 1,224,900 Corporate Expenses—Shareholder Relations 142,300 Corporate Expenses—Customer Support 517,500 Corporate Expenses—Legal 180,000 General Corporate Officers' Salaries 314,300 The company operates three service departments: Shareholder Relations, Customer Support, and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company. The Customer Support Department is the company's point of contact for…
1)PLEASE ANSWERED WITH IN THE FORMAT BY PROVIDING FORMULA IN DETAILS2)PLEASE PROVIDE ANSWER IN TEXT Divisional income statement 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 21, 20Y7, are as follows: