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 | $26,880,000 |
| SalesSummer Sports Division | 29,696,000 |
| Cost of Goods SoldWinter Sports Division | 16,128,000 |
| Cost of Goods SoldSummer Sports Division | 17,152,000 |
| Sales ExpenseWinter Sports Division | 4,608,000 |
| Sales ExpenseSummer Sports Division | 4,096,000 |
| Administrative ExpenseWinter Sports Division | 2,688,000 |
| Administrative ExpenseSummer Sports Division | 2,636,800 |
| Advertising Expense | 880,000 |
| Transportation Expense | 518,400 |
| Accounts Receivable Collection Expense | 220,800 |
| Warehouse Expense | 2,560,000 |
The bases to be used in allocating expenses, together with other information, are as follows:
Advertising expenseincurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $413,000; Summer Sports Division, $467,000.
Transportation expenseallocated to divisions at a rate of $18 per bill of lading: Winter Sports Division, 13,700 bills of lading; Summer Sports Division, 15,100 bills of lading.
Accounts receivable collection expenseincurred at headquarters, allocated to divisions at a rate of $8 per invoice: Winter Sports Division, 12,700 sales invoices; Summer Sports Division, 14,900 sales invoices.
Warehouse expenseallocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 140,000 square feet; Summer Sports Division, 180,000 square feet.
Question Content Area
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.
| Winter Sports Division | Summer Sports Division | |
| Sales | $fill in the blank f59cf309afe507c_1 | $fill in the blank f59cf309afe507c_2 |
| Cost of goods sold | fill in the blank f59cf309afe507c_3 | fill in the blank f59cf309afe507c_4 |
| Gross profit | $fill in the blank f59cf309afe507c_5 | $fill in the blank f59cf309afe507c_6 |
| Divisional selling and administrative expenses: | blank | blank |
| Divisional selling expenses | $fill in the blank f59cf309afe507c_7 | $fill in the blank f59cf309afe507c_8 |
| Divisional administrative expenses | fill in the blank f59cf309afe507c_9 | fill in the blank f59cf309afe507c_10 |
| Total divisional selling and administrative expenses | $fill in the blank f59cf309afe507c_11 | $fill in the blank f59cf309afe507c_12 |
| Operating income before support department allocations | $fill in the blank f59cf309afe507c_13 | $fill in the blank f59cf309afe507c_14 |
| Support department allocations: | ||
| Advertising expense | $fill in the blank f59cf309afe507c_15 | $fill in the blank f59cf309afe507c_16 |
| Transportation expense | fill in the blank f59cf309afe507c_17 | fill in the blank f59cf309afe507c_18 |
| Accounts receivable collection expense | fill in the blank f59cf309afe507c_19 | fill in the blank f59cf309afe507c_20 |
| Warehouse expense | fill in the blank f59cf309afe507c_21 | fill in the blank f59cf309afe507c_22 |
| Total support department allocations | $fill in the blank f59cf309afe507c_23 | $fill in the blank f59cf309afe507c_24 |
| Operating income | $fill in the blank f59cf309afe507c_25 | $fill in the blank f59cf309afe507c_26 |
Feedback Area
Feedback
For each division: Sales minus cost of goods sold equals gross profit minus divisional selling and administrative expenses equals operating income before support department allocations. Support department allocations are subtracted from operating income before support department allocations.
Question Content Area
Provide supporting schedules for determining support department allocations. If required, round per unit amounts to two decimal places and final answers to the nearest dollar.
| Winter Sports Division | Summer Sports Division | Total | |
| Advertising expense | $fill in the blank df681d0a9075faa_1 | $fill in the blank df681d0a9075faa_2 | $fill in the blank df681d0a9075faa_3 |
| Transportation rate per bill of lading | $fill in the blank df681d0a9075faa_4 | $fill in the blank df681d0a9075faa_5 | |
| Number of bills of lading | fill in the blank df681d0a9075faa_6 | fill in the blank df681d0a9075faa_7 | |
| Transportation expense | $fill in the blank df681d0a9075faa_8 | $fill in the blank df681d0a9075faa_9 | $fill in the blank df681d0a9075faa_10 |
| Accounts receivable collection rate | $fill in the blank df681d0a9075faa_11 | $fill in the blank df681d0a9075faa_12 | |
| Number of sales invoices | fill in the blank df681d0a9075faa_13 | fill in the blank df681d0a9075faa_14 | |
| Accounts receivable collection expense | $fill in the blank df681d0a9075faa_15 | $fill in the blank df681d0a9075faa_16 | $fill in the blank df681d0a9075faa_17 |
| Warehouse rate per sq. ft. | $fill in the blank df681d0a9075faa_18 | $fill in the blank df681d0a9075faa_19 | |
| Number of square feet | fill in the blank df681d0a9075faa_20 | fill in the blank df681d0a9075faa_21 | |
| Warehouse expense | $fill in the blank df681d0a9075faa_22 | $fill in the blank df681d0a9075faa_23 | $fill in the blank df681d0a9075faa_24 |
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Auditing And Assurance Services
Authors: Louwers, Timothy Louwers
5th Edition
0078025443, 978-0078025440
