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10.13 Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the

10.13

Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:

SalesWinter Sports Division $8,200,000
SalesSummer Sports Division 15,700,000
Cost of Goods SoldWinter Sports Division 4,200,000
Cost of Goods SoldSummer Sports Division 8,700,000
Sales ExpenseWinter Sports Division 720,000
Sales ExpenseSummer Sports Division 1,600,000
Administrative ExpenseWinter Sports Division 890,000
Administrative ExpenseSummer Sports Division 1,640,000
Advertising Expense 1,021,000
Transportation Expense 250,000
Accounts Receivable Collection Expense 204,000
Warehouse Expense 924,000

The bases to be used in allocating expenses, together with other information, are as follows:

  1. Advertising expenseincurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $313,000; Summer Sports Division, $708,000.
  2. Transportation expensecharged back to divisions at a charge rate of $5.00 per bill of lading: Winter Sports Division, 16,500 bills of lading; Summer Sports Division, 33,500 bills of lading.
  3. Accounts receivable collection expenseincurred at headquarters, charged back to divisions at a charge rate of $3.00 per invoice: Winter Sports Division, 25,000 sales invoices; Summer Sports Division, 43,000 sales invoices.
  4. Warehouse expensecharged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 54,000 square feet; Summer Sports Division, 100,000 square feet.

Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your intermediate calculations.

Championship Sports Inc.
Divisional Income Statements
For the Year Ended December 31, 20Y9
Winter Sports Division Summer Sports Division
Sales $___ $___
Cost of goods sold ___ ___
Gross profit $___ $___
Divisional selling and administrative expenses:
Divisional selling expenses $___ $_____
Divisional administrative expenses ___ ___
Total divisional selling and administrative expenses $___ $___
Operating income before support department allocations $___ $____
Support department allocations:
Advertising expense $___ $____
Transportation expense ____ ____
Accounts receivable collection expense ___ ____
Warehouse expense ____ ____
Total support department allocations $___ $____
Operating income $___ $____

Provide supporting computations for support department allocations. If required, round per unit amounts to two decimal places and final answers to the nearest dollar.

Championship Sports Inc.
Support Department Allocations
For the Year Ended December 31, 20Y9
Winter Sports Division Summer Sports Division Total
Advertising expense $___ $___ $___
Transportation rate per bill of lading $___ $___
Number of bills of lading ____ ___
Transportation expense $___ $___ $___
Accounts receivable collection rate $____ $___
Number of sales invoices ____ _____
Accounts receivable collection expense $_____ $_____ $_____
Warehouse rate per sq. ft. _______ _____
Number of square feet ______ _______
Warehouse expense ______ _______ _____

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