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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

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, 20Y7, are as follows:

Tech Services Department $1,014,300
Purchasing Department 507,000
Other corporate administrative expenses 654,000
Total expense $2,175,300

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:

Tech Services Purchasing
Consumer Division 390 computers 5,900 purchase orders
Commercial Division 240 11,000
Total 630 computers 16,900 purchase orders

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:

Consumer Commercial
Revenues $9,465,800 $8,302,000
Cost of goods sold 5,258,800 4,192,100
Operating expenses 1,856,700 2,075,300

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, 20Y7
Consumer Division Commercial Division
Revenues $ $
Cost of goods sold
? $ $
Operating expenses
Operating income before support department allocations $ $
Support department allocations:
Tech service department $ $
Purchasing department
Total support department allocations $ $
? $ $

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