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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 corporate expenses for the year ended December 31, 20Y7, are as follows:

Tech Services Department	$1,046,500
Purchasing Department	392,500
Other corporate administrative expenses	619,000
Total expense	$2,058,000

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	400	computers	5,500	purchase orders
Commercial Division	250		10,200
Total	650	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	$9,190,800		$7,619,200
Cost of goods sold	5,106,000		3,847,300
Operating expenses	1,802,800		1,904,600

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 expensesRevenues		$- Select -		$- Select -
CashCost of goods soldGross profitOperating incomeTech service department		- Select -		- Select -
CashGross profitLoss from operationsOperating expensesRevenues		$- Select -		$- Select -
CashOperating incomeLoss from operationsOperating expensesPurchasing department		- Select -		- Select -
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 department		$- Select -		$- Select -
CashGross profitOperating incomeOperating expensesPurchasing department		- Select -		- Select -
Total support department allocations		$fill in the blank 21		$fill in the blank 22
Gross profitOperating incomeOperating income before service department chargesLoss from operations		$- Select -		$- Select -