On-Demand Sports Co. operates two divisions-the Action Sports Division and the Team Sports Division. The following income and expense accounts were provided as of November 30, 20Y1, the end of the current fiscal year, after all adjustments, including those for inventories, were recorded: Sales-Action Sports (AS) Division $27,562,500 Sales-Team Sports (TS) Division 30,450,000 Cost of Goods Sold-Action Sports (AS) Division 16,537,500 Cost of Goods Sold-Team Sports (TS) Division 17,587,500 Sales Expense-Action Sports (AS) Division 4,725,000 Sales Expense-Team Sports (TS) Division 4,200,000 Administrative Expense-Action Sports (AS) Division 2,756,300 Administrative Expense-Team Sports (TS) Division 2,703,800 Advertising Expense 965,000 Transportation Expense 492,000 Accounts Receivable Collection Expense 220,500 Warehouse Expense 2,625,000 The bases to be used in allocating expenses, together with other essential information, are as follows: a. Advertising expense-incurred at headquarters, charged back to divisions on the basis of usage: Action Sports Division, $453,000; Team Sports Division, $512,000. b. Transportation expense-charged back to divisions at a charge rate of $15 per bill of lading: Action Sports Division, 15,600 bills of lading; Team Sports Division, 17,200 bills of lading. C. Accounts receivable collection expense-incurred at headquarters, charged back to divisions at a charge rate of $7 per invoice: Action Sports Division, 14,500 sales invoices; Team Sports Division, 17,000 sales invoices. d. Warehouse expense-charged back to divisions on the basis of floor space used in storing division products: Action Sports Division, 130,000 square feet; Team Sports Division, 170,000 square feet. Prepare a divisional income statement with two column headings: Action Sports Division and Team Sports Division. ON-DEMAND SPORTS CO. Divisional Income Statements For the Year Ended November 30, 20Y1 Action Sports Division Team Sports Division Sales Cost of goods sold Gross profit Divisional selling expenses Divisional administrative expenses Operating income before service department charges Less service department charges: Advertising expense Transportation expense Accounts receivable collection expense Warehouse expense Total Operating income Provide supporting schedules for determining service department charges. If required, round your answers to the nearest cent. ON-DEMAND SPORTS CO. Service Department Charges Action Sports Division Team Sports Division Total Advertising expense Transportation rate per bill of lading Number of bills of lading Transportation expense Accounts receivable collection rate Number of sales invoices Accounts receivable collection expense Warehouse rate per sq. ft. Number of square feet Warehouse expense
