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Bright Corporation is organized into two geographic divisions (East and West) and a corporate headquarters. Late in year 1, the Bright Corporation CFO prepared financial
Bright Corporation is organized into two geographic divisions (East and West) and a corporate headquarters. Late in year 1, the Bright Corporation CFO prepared financial operating plans (budgets) for the two divisions, shown as follows. Revenues Direct division costs Operating profit before allocation East $2,720,000 1,632,000 $1,088,000 West $4,080,000 1,904,000 $2,176,000 Corporate overhead costs are expected to be $1,224,000 in year 2. Of the $1,224,000, $680,000 is fixed and $544,000 is variable, with respect to revenue. Division managers are evaluated and compensated in part on division operating profit relative to the budget. Required: a. Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits in each division for year 2 after the corporate costs are allocated? b. At the end of year 2, actual corporate costs incurred were $1,194,000. Of the $1,194,000, $716,400 was fixed. Actual results in the two divisions are as shown as follows. Revenues Direct costs Operating profit before allocation East $2,040,000 1,360,000 $ 680,000 West $4,080,000 1,904,000 $2,176,000 What are the operating profits in each division for year 2 after the corporate costs are allocated? Complete this question by entering your answers in the tabs below. Required A Required B Required A Required B Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits in each division for year 2 after the corporate costs are allocated? (Do not round intermediate calculations.) East West Total Revenues Direct costs Operating profit before allocations Corporate costs Operating profit $ 0 $ 0 $ $ 0 $ 0 $ 0 Required A Required B Complete this question by entering your answers in the tabs below. Required A Required B What are the operating profits in each division for year 2 after the corporate costs are allocated? (Do not round intermediat calculations.) East West Total Revenues Direct costs Operating profit before allocations Corporate costs Operating profit 0 $ 0 $ $ 0 $ 0 $ 0
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