Question
Profit center responsibility reporting Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were
Profit center responsibility reporting
Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:
SalesWinter Sports Division | $8,800,000 |
SalesSummer Sports Division | 15,000,000 |
Cost of Goods SoldWinter Sports Division | 4,400,000 |
Cost of Goods SoldSummer Sports Division | 9,800,000 |
Sales ExpenseWinter Sports Division | 620,000 |
Sales ExpenseSummer Sports Division | 1,100,000 |
Administrative ExpenseWinter Sports Division | 810,000 |
Administrative ExpenseSummer Sports Division | 1,330,000 |
Advertising Expense | 1,115,000 |
Transportation Expense | 294,000 |
Accounts Receivable Collection Expense | 68,000 |
Warehouse Expense | 906,000 |
The bases to be used in allocating expenses, together with other information, are as follows:
- Advertising expenseincurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $349,000; Summer Sports Division, $766,000.
- Transportation expensecharged back to divisions at a charge rate of $6.00 per bill of lading: Winter Sports Division, 18,000 bills of lading; Summer Sports Division, 31,000 bills of lading.
- Accounts receivable collection expenseincurred at headquarters, charged back to divisions at a charge rate of $1.00 per invoice: Winter Sports Division, 23,000 sales invoices; Summer Sports Division, 45,000 sales invoices.
- Warehouse expensecharged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 55,000 square feet; Summer Sports Division, 96,000 square feet.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
Open spreadsheet
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your intermediate calculations.
1. Championship Sports Inc. | |||||
Divisional Income Statements | |||||
For the Year Ended December 31, 20Y9 | |||||
Winter Sports Division | Summer Sports Division | ||||
Sales | $fill in the blank 2 | $fill in the blank 3 | |||
Cost of goods sold | fill in the blank 4 | fill in the blank 5 | |||
Gross profit | $fill in the blank 6 | $fill in the blank 7 | |||
Divisional selling and administrative expenses: | |||||
Divisional selling expenses | $fill in the blank 8 | $fill in the blank 9 | |||
Divisional administrative expenses | fill in the blank 10 | fill in the blank 11 | |||
Total divisional selling and administrative expenses | $fill in the blank 12 | $fill in the blank 13 | |||
Operating income before support department allocations | $fill in the blank 14 | $fill in the blank 15 | |||
Support department allocations: | |||||
Advertising expense | $fill in the blank 16 | $fill in the blank 17 | |||
Transportation expense | fill in the blank 18 | fill in the blank 19 | |||
Accounts receivable collection expense | fill in the blank 20 | fill in the blank 21 | |||
Warehouse expense | fill in the blank 22 | fill in the blank 23 | |||
Total support department allocations | $fill in the blank 24 | $fill in the blank 25 | |||
Operating income | $fill in the blank 26 | $fill in the blank 27 |
Provide supporting computations for support department allocations. If required, round per unit amounts to two decimal places and final answers to the nearest dollar.
2. Championship Sports Inc. | ||||||
Support Department Allocations | ||||||
For the Year Ended December 31, 20Y9 | ||||||
Winter Sports Division | Summer Sports Division | Total | ||||
Advertising expense | $fill in the blank 28 | $fill in the blank 29 | $fill in the blank 30 | |||
Transportation rate per bill of lading | $fill in the blank 31 | $fill in the blank 32 | ||||
Number of bills of lading | fill in the blank 33 | fill in the blank 34 | ||||
Transportation expense | $fill in the blank 35 | $fill in the blank 36 | $fill in the blank 37 | |||
Accounts receivable collection rate | $fill in the blank 38 | $fill in the blank 39 | ||||
Number of sales invoices | fill in the blank 40 | fill in the blank 41 | ||||
Accounts receivable collection expense | $fill in the blank 42 | $fill in the blank 43 | $fill in the blank 44 | |||
Warehouse rate per sq. ft. | $fill in the blank 45 | $fill in the blank 46 | ||||
Number of square feet | fill in the blank 47 | fill in the blank 48 | ||||
Warehouse expense | $fill in the blank 49 | $fill in the blank 50 | $fill in the blank 51 |
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