Question
Divisional income statements with support department allocations Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments, Tech Services and Purchasing.
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, 2017, are as follows: Tech Services Department $1,005,000 Purchasing Department 392,500 Other corporate administrative expenses Total expense 601,000 $1,998,500 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: Consumer Division Commercial Division Total Purchasing Tech Services 460 computers 290 5,500 purchase orders 10,200 750 computers 15,700 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 $8,866,100 $7,458,200 Cost of goods sold 4,925,600 3,766,000 Operating expenses 1,739,100 1,864,400 Tech Services Consumer Division 460 computers Purchasing 5,500 purchase orders Commercial Division 290 10,200 Total 15,700 purchase orders 750 computers 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: Revenues Cost of goods sold Operating expenses Consumer Commercial $8,866,100 $7,458,200 4,925,600 1,739,100 3,766,000 1,864,400 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 Line Item Description Consumer Commercial Division Division Revenues Cost of goods sold Operating expenses Consumer Commercial $8,866,100 $7,458,200 4,925,600 3,766,000 1,739,100 1,864,400 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 Line Item Description Operating income before support department allocations. Support department allocations: Total support department allocations Gross profit Operating income Operating income before service department charges Loss from operations Consumer Commercial Division Division
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