Chapter 9, Problem 8E

(a)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Service department charges: These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department.

To compare: The performance of P Division and C Division of Incorporation WSA, and explain if the income from operations as performance measure is accurate.

(b)

To determine

To prepare: The income statements for C Division and P Division