Corrections to Service Department Allocations for a Service Company Wild Sun Airlines Inc. has two divisions...

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Corrections to Service Department Allocations for a Service Company Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: Wild Sun Airlines Inc. Divisional Income Statements For the Year Ended December 31, 20Y9 Revenues Operating expenses Income from operations before Passenger Division Cargo Division $2,368,000 $2,368,000 1,917,000 2,133,500 $451,000 $234,500 service department allocations Less service department cost allocations: Training $99,900 $99,900 Flight scheduling 86,900 86,900 Reservations 117,000 Income from operations 303,800 $147,200 117,000 303,800 $(69,300) The service department allocations rate for the service department costs was based on revenues. Because the revenues of the two divisions were the same, the service department allocations to each division were also the same. The following additional information is available: Passenger Cargo Division Division Total Number of personnel trained 260 110 370 Number of flights 330 460 790 Number of reservations requested 18,000 0 18,000 a. Does the income from operations for the two divisions accurately measure performance? Explain. The reported income from operations Revenues accurately measure performance because the service department allocations are based on associated with the profit center manager's use of the service department services. b. Correct the divisional income statements, using the cost drivers provided in revising the service department cost allocations. If an amount box does not require an entry, leave it blank. Do not round your interim calculations. Wild Sun Airlines Inc. Divisional Income Statements For the Year Ended December 31, 20Y9 Income from operations before service department allocations Less service department cost allocations: Passenger Division Cargo Division $ Corrections to Service Department Allocations for a Service Company Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: Wild Sun Airlines Inc. Divisional Income Statements For the Year Ended December 31, 20Y9 Revenues Operating expenses Income from operations before Passenger Division Cargo Division $2,368,000 $2,368,000 1,917,000 2,133,500 $451,000 $234,500 service department allocations Less service department cost allocations: Training $99,900 $99,900 Flight scheduling 86,900 86,900 Reservations 117,000 Income from operations 303,800 $147,200 117,000 303,800 $(69,300) The service department allocations rate for the service department costs was based on revenues. Because the revenues of the two divisions were the same, the service department allocations to each division were also the same. The following additional information is available: Passenger Cargo Division Division Total Number of personnel trained 260 110 370 Number of flights 330 460 790 Number of reservations requested 18,000 0 18,000 a. Does the income from operations for the two divisions accurately measure performance? Explain. The reported income from operations Revenues accurately measure performance because the service department allocations are based on associated with the profit center manager's use of the service department services. b. Correct the divisional income statements, using the cost drivers provided in revising the service department cost allocations. If an amount box does not require an entry, leave it blank. Do not round your interim calculations. Wild Sun Airlines Inc. Divisional Income Statements For the Year Ended December 31, 20Y9 Income from operations before service department allocations Less service department cost allocations: Passenger Division Cargo Division $