Divisional Income Statements with Service Department Charges

Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows:

Tech Support Department	$336,000
Purchasing Department	67,500
Other corporate administrative expenses	448,000
Total corporate expense	$851,500

The other corporate administrative expenses include officers salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department charges 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	300	computers	1,800	purchase orders
Commercial Division	180		2,700
Total	480	computers	4,500	purchase orders

The service department charges of the Tech Support Department and the Purchasing Department are considered controllable by the divisions. Corporate administrative expenses 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	$5,900,000		$4,950,000
Cost of goods sold	3,304,000		2,475,000
Operating expenses	1,180,000		1,237,500

Prepare the divisional income statements for the two divisions. Round your interim calculations to three decimal places, if required.

		Consumer Division		Commercial Division
Gross profitIncome from operationsOperating expensesRevenuesGross profit
Cost of goods soldGross profitIncome from operationsTech support departmentIncome from operations
Gross profitLoss from operationsOperating expensesRevenues		$- Select -		$- Select -
Purchasing departmentIncome from operationsLoss from operationsOperating expenses		- Select -		- Select -
Income from operations before service department charges
Less service department charges:
Cost of goods soldIncome from operationsOperating expensesTech support department	$- Select -		$- Select -
Purchasing departmentGross profitIncome from operationsOperating expenses	- Select -	- Select -	- Select -	- Select -
Gross profitIncome from operationsIncome from operations before service department chargesLoss from operations		$- Select -		$- Select -