Divisional income statements with support department allocations

Horton Technology has two divisions, Consumer and Commercial, and two corporate

support departments, Tech Services and Purchasing. The corporate expenses for the

year ended December $31,20$Y$7,$ are as follows:

The other corporate administrative expenses include officers' salaries and other

expenses required by the corporation. The Tech Services Department allocates costs to

the divisions based on the number of computers in the department, and the Purchasing

Department allocates costs to the divisions based on the number of purchase orders for

each department. The services used by the two divisions are as follows:

The support department allocations of the Tech Services 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:

Prepare the divisional income statements for the two divisions. Do not round your

interim calculations.

Horton Technology

Divisional Income Statements

For the Year Ended December $31,20$ Y$7$

Line Item Description

Division Division

Operating income before support department allocations

Support department allocations: