2.

Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments, Tech Services and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows:

Tech Services Department	$1,022,000
Purchasing Department	308,000
Other corporate administrative expenses	572,000
Total expense	$1,902,000

The other corporate administrative expenses include officers salaries and other expenses required by the corporation. The Tech Services Department allocates costs to the divisions based on the number of computers in the department, and the Purchasing Department allocates costs to the divisions based on the number of purchase orders for each department. The services used by the two divisions are as follows:

	Tech Services		Purchasing
Consumer Division	450	computers	5,400	purchase orders
Commercial Division	280		10,000
Total	730	computers	15,400	purchase orders

The support department allocations of the Tech Services Department and the Purchasing Department are considered controllable by the divisions. Corporate administrative expenses are not considered controllable by the divisions. The revenues, cost of goods sold, and operating expenses for the two divisions are as follows:

	Consumer		Commercial
Revenues	$8,679,400		$6,860,300
Cost of goods sold	4,821,900		3,464,100
Operating expenses	1,702,500		1,714,900

Prepare the divisional income statements for the two divisions. Do not round your interim calculations.

Horton Technology Divisional Income Statements For the Year Ended December 31, 20Y7

		Consumer Division		Commercial Division
Gross profitCashOperating incomeOperating expensesRevenuesRevenues		$Revenues		$Revenues
CashCost of goods soldGross profitOperating incomeTech service departmentCost of goods sold		Cost of goods sold		Cost of goods sold
CashGross profitLoss from operationsOperating expensesRevenues		$- Select -		$- Select -
CashOperating incomeLoss from operationsOperating expensesPurchasing department		- Select -		- Select -
Operating income before support department allocations		$fill in the blank 13		$fill in the blank 14
Support department allocations:
CashCost of goods soldOperating incomeOperating expensesTech service department		$- Select -		$- Select -
CashGross profitOperating incomeOperating expensesPurchasing department		- Select -		- Select -
Total support department allocations		$fill in the blank 21		$fill in the blank 22
Gross profitOperating incomeOperating income before service department chargesLoss from operations		$- Select -		$- Select -

3.

The operating income and the amount of invested assets in each division of Conley Industries are as follows:

	Operating Income		Invested Assets
Retail Division	$64,600		$340,000
Commercial Division	78,400		490,000
Internet Division	170,400		710,000

a. Compute the return on investment for each division. (Round to the nearest whole percentage.)

Division	Percent
Retail Division	fill in the blank 1 %
Commercial Division	fill in the blank 2 %
Internet Division	fill in the blank 3 %

b. Which division is the most profitable per dollar invested?

Commercial DivisionInternet DivisionRetail Division