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 | $30,345,000 |
| SalesSummer Sports Division | 33,524,000 |
| Cost of Goods SoldWinter Sports Division | 18,207,000 |
| Cost of Goods SoldSummer Sports Division | 19,363,000 |
| Sales ExpenseWinter Sports Division | 5,202,000 |
| Sales ExpenseSummer Sports Division | 4,624,000 |
| Administrative ExpenseWinter Sports Division | 3,034,500 |
| Administrative ExpenseSummer Sports Division | 2,976,700 |
| Advertising Expense | 939,000 |
| Transportation Expense | 429,800 |
| Accounts Receivable Collection Expense | 206,500 |
| Warehouse Expense | 2,890,000 |
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, $441,000; Summer Sports Division, $498,000.
- Transportation expenseallocated to divisions at a rate of $14 per bill of lading: Winter Sports Division, 14,600 bills of lading; Summer Sports Division, 16,100 bills of lading.
- Accounts receivable collection expenseincurred at headquarters, allocated to divisions at a rate of $7 per invoice: Winter Sports Division, 13,600 sales invoices; Summer Sports Division, 15,900 sales invoices.
- Warehouse expenseallocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 150,000 square feet; Summer Sports Division, 190,000 square feet.
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.
| Championship Sports Inc. | ||
| Divisional Income Statements | ||
| For the Year Ended December 31, 20Y9 | ||
| Winter Sports Division | Summer Sports Division | |
| Sales | $fill in the blank f19ca3f9afe6fbc_1 | $fill in the blank f19ca3f9afe6fbc_2 |
| Cost of goods sold | fill in the blank f19ca3f9afe6fbc_3 | fill in the blank f19ca3f9afe6fbc_4 |
| Gross profit | $fill in the blank f19ca3f9afe6fbc_5 | $fill in the blank f19ca3f9afe6fbc_6 |
| Divisional selling and administrative expenses: | ||
| Divisional selling expenses | $fill in the blank f19ca3f9afe6fbc_7 | $fill in the blank f19ca3f9afe6fbc_8 |
| Divisional administrative expenses | fill in the blank f19ca3f9afe6fbc_9 | fill in the blank f19ca3f9afe6fbc_10 |
| Total divisional selling and administrative expenses | $fill in the blank f19ca3f9afe6fbc_11 | $fill in the blank f19ca3f9afe6fbc_12 |
| Operating income before support department allocations | $fill in the blank f19ca3f9afe6fbc_13 | $fill in the blank f19ca3f9afe6fbc_14 |
| Support department allocations: | ||
| Advertising expense | $fill in the blank f19ca3f9afe6fbc_15 | $fill in the blank f19ca3f9afe6fbc_16 |
| Transportation expense | fill in the blank f19ca3f9afe6fbc_17 | fill in the blank f19ca3f9afe6fbc_18 |
| Accounts receivable collection expense | fill in the blank f19ca3f9afe6fbc_19 | fill in the blank f19ca3f9afe6fbc_20 |
| Warehouse expense | fill in the blank f19ca3f9afe6fbc_21 | fill in the blank f19ca3f9afe6fbc_22 |
| Total support department allocations | $fill in the blank f19ca3f9afe6fbc_23 | $fill in the blank f19ca3f9afe6fbc_24 |
| Operating income | $fill in the blank f19ca3f9afe6fbc_25 | $fill in the blank f19ca3f9afe6fbc_26 |
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.
| Championship Sports Inc. | |||
| Support Department Allocations | |||
| For the Year Ended December 31, 20Y9 | |||
| Winter Sports Division | Summer Sports Division | Total | |
| Advertising expense | $fill in the blank 4c584efd7fda045_1 | $fill in the blank 4c584efd7fda045_2 | $fill in the blank 4c584efd7fda045_3 |
| Transportation rate per bill of lading | $fill in the blank 4c584efd7fda045_4 | $fill in the blank 4c584efd7fda045_5 | |
| Number of bills of lading | fill in the blank 4c584efd7fda045_6 | fill in the blank 4c584efd7fda045_7 | |
| Transportation expense | $fill in the blank 4c584efd7fda045_8 | $fill in the blank 4c584efd7fda045_9 | $fill in the blank 4c584efd7fda045_10 |
| Accounts receivable collection rate | $fill in the blank 4c584efd7fda045_11 | $fill in the blank 4c584efd7fda045_12 | |
| Number of sales invoices | fill in the blank 4c584efd7fda045_13 | fill in the blank 4c584efd7fda045_14 | |
| Accounts receivable collection expense | $fill in the blank 4c584efd7fda045_15 | $fill in the blank 4c584efd7fda045_16 | $fill in the blank 4c584efd7fda045_17 |
| Warehouse rate per sq. ft. | $fill in the blank 4c584efd7fda045_18 | $fill in the blank 4c584efd7fda045_19 | |
| Number of square feet | fill in the blank 4c584efd7fda045_20 | fill in the blank 4c584efd7fda045_21 | |
| Warehouse expense | $fill in the blank 4c584efd7fda045_22 | $fill in the blank 4c584efd7fda045_23 | $fill in the blank 4c584efd7fda045_24 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
The Quality Audit A Management Evaluation Tool
Authors: Charles A. Mills
1st Edition
0070424284, 978-0070424289
