Question
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows:
Tech Support Department | $ 510,300 |
Purchasing Department | 60,500 |
Other corporate administrative expenses | 580,000 |
Total corporate expense | $1,150,800 |
The other corporate administrative expenses include officers salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department charges divisions for services, based on the number of purchase orders for each department. The usage of service by the two divisions is as follows:
Tech Support | Purchasing | |
Consumer Division | 320 computers | 2,000 purchase orders |
Commercial Division | 310 | 3,500 |
Total | 630 computers | 5,500 purchase orders |
The service department charges of the Tech Support 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 | $7,430,000 | $6,187,000 |
Cost of goods sold | 4,109,000 | 3,117,500 |
Operating expenses | 1,460,000 | 1,541,500 |
Prepare the divisional income statements for the two divisions. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Less or Plus and colons will automatically appear if it is required. Be sure to complete the statement heading.
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