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	$899,100
Purchasing Department	244,500
Other corporate administrative expenses	492,000
Total expense	$1,635,600

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	500	computers	5,700	purchase orders
Commercial Division	310		10,600
Total	810	computers	16,300	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	$7,532,600		$5,830,100
Cost of goods sold	4,184,800		2,943,900
Operating expenses	1,477,500		1,457,400

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

		Consumer Division		Commercial Division
Gross profitCashOperating incomeOperating expensesRevenuesRevenues		$Revenues		$Revenues
CashCost of goods soldGross profitOperating incomeTech service departmentCost of goods sold		Cost of goods sold		Cost of goods sold
CashGross profitLoss from operationsOperating expensesRevenuesGross profit		$Gross profit		$Gross profit
CashOperating incomeLoss from operationsOperating expensesPurchasing departmentOperating expenses		Operating expenses		Operating expenses
Operating income before support department allocations		$fill in the blank 13		$fill in the blank 14
Support department allocations:
CashCost of goods soldOperating incomeOperating expensesTech service departmentTech service department		$Tech service department		$Tech service department
CashGross profitOperating incomeOperating expensesPurchasing departmentPurchasing department		Purchasing department		Purchasing department
Total support department allocations		$fill in the blank 21		$fill in the blank 22
Gross profitOperating incomeOperating income before service department chargesLoss from operationsOperating income		$Operating income		$Operating income