Question
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
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 | $31,080,000 |
| SalesSummer Sports Division | 34,336,000 |
| Cost of Goods SoldWinter Sports Division | 18,648,000 |
| Cost of Goods SoldSummer Sports Division | 19,832,000 |
| Sales ExpenseWinter Sports Division | 5,328,000 |
| Sales ExpenseSummer Sports Division | 4,736,000 |
| Administrative ExpenseWinter Sports Division | 3,108,000 |
| Administrative ExpenseSummer Sports Division | 3,048,800 |
| Advertising Expense | 956,000 |
| Transportation Expense | 343,200 |
| Accounts Receivable Collection Expense | 218,400 |
| Warehouse Expense | 2,960,000 |
The bases to be used in allocating expenses, together with other information, are as follows:
- Advertising expenseincurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $449,000; Summer Sports Division, $507,000.
- Transportation expenseallocated to divisions at a rate of $12 per bill of lading: Winter Sports Division, 13,600 bills of lading; Summer Sports Division, 15,000 bills of lading.
- Accounts receivable collection expenseincurred at headquarters, allocated to divisions at a rate of $8 per invoice: Winter Sports Division, 12,600 sales invoices; Summer Sports Division, 14,700 sales invoices.
- Warehouse expenseallocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 140,000 square feet; Summer Sports Division, 180,000 square feet.
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.
| Winter Sports Division | Summer Sports Division | |
| Sales | $fill in the blank 868a74095f8606f_1 | $fill in the blank 868a74095f8606f_2 |
| Cost of goods sold | fill in the blank 868a74095f8606f_3 | fill in the blank 868a74095f8606f_4 |
| Gross profit | $fill in the blank 868a74095f8606f_5 | $fill in the blank 868a74095f8606f_6 |
| Divisional selling and administrative expenses: | ||
| Divisional selling expenses | $fill in the blank 868a74095f8606f_7 | $fill in the blank 868a74095f8606f_8 |
| Divisional administrative expenses | fill in the blank 868a74095f8606f_9 | fill in the blank 868a74095f8606f_10 |
| Total divisional selling and administrative expenses | $fill in the blank 868a74095f8606f_11 | $fill in the blank 868a74095f8606f_12 |
| Operating income before support department allocations | $fill in the blank 868a74095f8606f_13 | $fill in the blank 868a74095f8606f_14 |
| Support department allocations: | ||
| Advertising expense | $fill in the blank 868a74095f8606f_15 | $fill in the blank 868a74095f8606f_16 |
| Transportation expense | fill in the blank 868a74095f8606f_17 | fill in the blank 868a74095f8606f_18 |
| Accounts receivable collection expense | fill in the blank 868a74095f8606f_19 | fill in the blank 868a74095f8606f_20 |
| Warehouse expense | fill in the blank 868a74095f8606f_21 | fill in the blank 868a74095f8606f_22 |
| Total support department allocations | $fill in the blank 868a74095f8606f_23 | $fill in the blank 868a74095f8606f_24 |
| Operating income | $fill in the blank 868a74095f8606f_25 | $fill in the blank 868a74095f8606f_26 |
Feedback
Provide supporting schedules for determining support department allocations. If required, round per unit amounts to two decimal places and final answers to the nearest dollar.
| Winter Sports Division | Summer Sports Division | Total | |
| Advertising expense | $fill in the blank ee7c99fa2fae062_1 | $fill in the blank ee7c99fa2fae062_2 | $fill in the blank ee7c99fa2fae062_3 |
| Transportation rate per bill of lading | $fill in the blank ee7c99fa2fae062_4 | $fill in the blank ee7c99fa2fae062_5 | |
| Number of bills of lading | fill in the blank ee7c99fa2fae062_6 | fill in the blank ee7c99fa2fae062_7 | |
| Transportation expense | $fill in the blank ee7c99fa2fae062_8 | $fill in the blank ee7c99fa2fae062_9 | $fill in the blank ee7c99fa2fae062_10 |
| Accounts receivable collection rate | $fill in the blank ee7c99fa2fae062_11 | $fill in the blank ee7c99fa2fae062_12 | |
| Number of sales invoices | fill in the blank ee7c99fa2fae062_13 | fill in the blank ee7c99fa2fae062_14 | |
| Accounts receivable collection expense | $fill in the blank ee7c99fa2fae062_15 | $fill in the blank ee7c99fa2fae062_16 | $fill in the blank ee7c99fa2fae062_17 |
| Warehouse rate per sq. ft. | $fill in the blank ee7c99fa2fae062_18 | $fill in the blank ee7c99fa2fae062_19 | |
| Number of square feet | fill in the blank ee7c99fa2fae062_20 | fill in the blank ee7c99fa2fae062_21 | |
| Warehouse expense | $fill in the blank ee7c99fa2fae062_22 | $fill in the blank ee7c99fa2fae062_23 | $fill in the blank ee7c99fa2fae062_24 |
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Finance The Basics
Authors: Erik Banks
3rd Edition
1138919780, 9781138919785
