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Profit center responsibility reporting
On-Demand Sports Co. operates two divisions—the Action Sports Division and the Team Sports Division. The following income and expense accounts were provided as of November 30. 20Y1, the end of the current fiscal year, after all adjustments, including those for inventories, were recorded
The bases to be used in allocating expenses, together with other essential information, are as follows
a.Advertising expense—incurred al headquarters, charged back to divisions on the basis of usage: Action Sports Division. $1,200,000; Team Sports Division, $1,800,000.
b. Transportation expense—charged hack lo divisions at a charge rale of $18.50 per bill of lading: Action Sports Division, 14.000 bills of lading; Team Sports Division. 21.400 bills of lading.
C.
d. Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Action Sports Division. 120.000 square feet; Team Sports Division. 80.000 square feet.
Prepare divisional income statements with two column headings: Action Sports Division and Team Sports Division. Provide supporting schedules for determining service department charges.
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Chapter 14 Solutions
Survey of Accounting (Accounting I)
- Service department charges 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: A. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. B. Using the cost driver information in (A), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. C. Why does the Residential Division have a larger support department allocation than the other two divisions, even though its sales are lower?arrow_forwardService Department Charges 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 $45,336, and the Purchasing Department had expenses of $23,320 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $ 487,000 $ 646,000 $ 1,483,000 Number of employees: Weekly payroll (52 weeks per year) 140 60 65 Monthly payroll 34 45 32 Number of purchase requisitions per year 2,200 1,600 1,500 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential…arrow_forwardService Department Charges 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 $32,536, and the Purchasing Department had expenses of $14,500 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $ 303,000 $ 402,000 $ 922,000 Number of employees: Weekly payroll (52 weeks per year) 125 80 85 Monthly payroll 30 41 28 Number of purchase requisitions per year 2,100 1,500 1,400 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential…arrow_forward
- Profit Center Responsibility Reporting for a Service CompanyThomas 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 income from operations 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 $3,780,000Revenues—S Region 5,673,000Revenues—W Region 5,130,000Operating Expenses—N Region 2,678,500Operating Expenses—S Region 4,494,890Operating Expenses—W Region 3,770,050Corporate Expenses—Dispatching 182,000Corporate Expenses—Equipment Management 1,200,000Corporate Expenses—Treasurer's 734,000General Corporate Officers' Salaries 1,380,000The company operates three service departments: the Dispatching Department, the Equipment Management Department,and the Treasurer's Department. The Dispatching Department manages the scheduling and releasing of completed…arrow_forwardProfit 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 Revenues-S Region Revenues-W Region Operating Expenses-N Region Operating Expenses-S Region Operating Expenses-W Region Corporate Expenses-Dispatching Corporate Expenses-Equipment Management Corporate Expenses-Treasurer's General Corporate Officers' Salaries $1,001,400 1,230,600 2,065,700 634,600 732,400 1,249,200 464,600 275,600 152,300 336,300 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 releasing of completed…arrow_forwardService Department Charges 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 $45,900, and the Purchasing Department had expenses of $19,360 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $ 405,000 $ 536,000 $ 1,231,000 Number of employees: Weekly payroll (52 weeks per year) 145 60 65 Monthly payroll 32 43 30 Number of purchase requisitions per year 1,900 1,300 1,200 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential…arrow_forward
- 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…arrow_forwardPlease do not give solution in image format thankuarrow_forwardService 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 $53,344, and the Purchasing Department had expenses of $25,370 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $530,000 $703,000 $1,614,000 Number of employees: Weekly payroll (52 weeks per year) 110 60 65 Monthly payroll 28 39 26 Number of purchase requisitions per year 1,800 1,300 1,200arrow_forward
- Profit center responsibility reporting for a service company Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CKO) evaluates divisional performance, using income from operations as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of december 31 Revenues -East $1,400,000 Revenues-East 2,000,000 Revenues-central 3,200,000 Operating Expenses- East 800,000 operating expenses-west 1.350,000 Operating Expenses - Central 1,900,000 Operating Expenses- shareholder relations 300,000 Corporate Expenses - Customer Support 320,000 Corporate Expenses Legal 500,000 General Corporate Officer's Salaries 1,200,000 The company operates three service departments: Shareholder Relation, Customer Support and Legal The shareholder Relations, Customer Support, and Legal. The shareholder relations department conducts a variety of services for shareholders of…arrow_forwardCost 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 $61,284, and the Purchasing Department had expenses of $26,400 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial Government Contract Sales $ 552,000 $ 731,000 $ 1,679,000 Number of employees: Weekly payroll (52 weeks per year) 245 60 65 Monthly payroll 30 41 28 Number of purchase requisitions per year 2,500 1,800 1,700 Required: a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential Commercial…arrow_forwardService 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…arrow_forward
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