Question
Divisional Income Statements with Service Department Allocations Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The
Divisional Income Statements with Service Department Allocations
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate costs for the year ended December 31, 20Y7, are as follows:
Tech Support Department | $1,196,800 |
Purchasing Department | 265,500 |
Other corporate administrative costs | 629,000 |
Total corporate costs | $2,091,300 |
The other corporate administrative costs include officers salaries and miscellaneous smaller costs required by the corporation. The Tech Support Department allocates the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department allocates divisions for services, based on the number of purchase orders for each department. The usage of service by the two divisions is as follows:
Tech Support | Purchasing | |||
Consumer Division | 420 | computers | 6,200 | purchase orders |
Commercial Division | 260 | 11,500 | ||
Total | 680 | computers | 17,700 | purchase orders |
The service department allocations of the Tech Support Department and the Purchasing Department are considered controllable by the divisions. Corporate administrative costs 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 | $9,786,800 | $7,301,900 | ||
Cost of goods sold | 5,437,100 | 3,687,100 | ||
Operating expenses | 1,919,700 | 1,825,300 |
Prepare the divisional income statements for the two divisions. Do not round your interim calculations.
Consumer Division | Commercial Division | |||
Cost of goods soldGross profitIncome from operationsOperating expensesRevenues | $- Select - | $- Select - | ||
Cost of goods soldGross lossGross profitIncome from operationsTech support department | - Select - | - Select - | ||
Gross profitIncome from operationsLoss from operationsOperating expensesRevenues | $- Select - | $- Select - | ||
Gross profitIncome from operationsLoss from operationsOperating expensesPurchasing department | - Select - | - Select - | ||
Income from operations before service department allocations | $fill in the blank 13 | $fill in the blank 14 | ||
Less service department cost allocations: | ||||
Cost of goods soldIncome from operationsOperating expensesRevenuesTech support department | $- Select - | $- Select - | ||
Gross profitIncome from operationsOperating expensesPurchasing departmentRevenues | - Select - | - Select - | - Select - | - Select - |
Gross profitIncome from operationsIncome from operations before service department allocationsLoss from operationsRevenues | $- Select - | $- Select - |
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