Burwell Manufacturing is organized into two divisions $($Agriculture and Mining$)$ and a corporate headquarters. The financial group of the corporate staff prepared financial operating plans $($budgets$)$ for the two divisions for the upcoming year $($year $1).$ Selected information from the plans is as follows:

Agriculture

Mining

Employees $($full$-$time equivalent, or FTE$)$

$23$

$52$

Revenues $($$$000)$

$ $8,000$

$ $17,000$

Direct division costs $($$$000)$

$5,200$

$13,300$

Operating profit before allocation $($$$000)$

$ $2,800$

$ $3,700$

Corporate overhead costs are expected to be $$3\mathrm{.}5$ million in year $1.$ Of the $$3\mathrm{.}5$ million, $$1\mathrm{.}25$ million is fixed and the remainder is variable. Two$-$thirds of the variable cost is variable with respect to revenue. The other third is variable with respect to the number of full$-$time equivalent $($FTE$)$ employees. Division managers are evaluated and compensated in part on division operating profit $($including any allocated corporate costs$)$ relative to the budget. Corporate overhead at Burwell is allocated based on relative revenues to determine both budgeted and actual operating profit.

Required:

What are the budgeted operating profits in each division for year $1$ after the corporate costs are allocated?

At the end of year $1,$ actual corporate costs incurred were $$3\mathrm{.}7$ million. Of the $$3\mathrm{.}7$ million, $$1\mathrm{.}44$ million was fixed, $$1\mathrm{.}3$ million was variable with respect to revenues, and $$0\mathrm{.}96$ million was variable with respect to FTEs. Actual division results in year $1,$ prior to any allocation, are as follows:

Agriculture

Mining

Employees $($FTE$)$

$25$

$55$

Revenues $($$$000)$

$ $10,400$

$ $15,600$

Direct costs $($$$000)$

$7,400$

$13,600$

Operating profit before allocation $($$$000)$

$ $3,000$

$ $2,000$

What are the actual $($reported$)$ operating profits in each division for year $1$ after the corporate costs are allocated?

a$.$ What are the budgeted operating profits in each division for year $1$ after the corporate costs are allocated?

b$.$ At the end of year $1,$ actual corporate costs incurred were $$3\mathrm{.}7$ million. Of the $$3\mathrm{.}7$ million, $$1\mathrm{.}44$ million was fixed, $$1\mathrm{.}3$ million was variable with respect to revenues, and $$0\mathrm{.}96$ million was variable with respect to FTEs. Actual division results in year $1,$ prior to any allocation, are as follows:

$\backslash$table$[[$Employees $($FTE$),$Agriculture,Mining$],[$Revenues $($$$000),25,55],[$Direct costs $($$$000),$$$10,400,$$$15,600$