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Profit center responsibility reporting
XSport 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
The bases to be used in allocating expenses, together with other essential information, are as follows:
a. Advertising expense-incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $216,900; Summer Sports Division, $265,100.
b. Transportation expense-charged back to divisions at a charge rate of $8.00 per bill of lading: Winter Sports Division, 14,400 bills of lading; Summer Sports Division, 15,600 bills of lading.
c.
d. Warehouse expense-charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 94,000 square feet; Summer Sports Division, 106,000 square feet.
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Provide supporting calculations for service department charges.
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