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Fortune Bakery makes baked goods for grocery stores, and has three divisions: bread, cake, and doughnuts. Each division is run and evaluated separately, but
Fortune Bakery makes baked goods for grocery stores, and has three divisions: bread, cake, and doughnuts. Each division is run and evaluated separately, but the main headquarters incurs costs that are indirect costs for the divisions. (Click to view information for each division and the main headquarters.) Read the requirements. Requirement 1. Allocate the indirect costs of Fortune to each division equally. Calculate division operating income after allocation of headquarter costs. (Enter operating losses with minus signs or parentheses.) Bread Cake Doughnuts Segment margin $ Allocated headquarter costs 6,200,000 $ 1,600,000 4,600,000 $ 1,200,000 $ 6,650,000 1,600,000 1,600,000 Operating income (loss) (400,000) $ 5,050,000 Requirement 2. Allocate headquarter costs to the individual divisions using the proposed allocation bases. Calculate the division operating income after allocation. (Round allocation proportions to three decimal places. Enter operating losses with minus signs or parentheses.) Segment margin Bread Cake Doughnuts $ 6,200,000 $ 1,200,000 $ 6,650,000
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