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 | $35,700,000 |
| SalesSummer Sports Division | 39,440,000 |
| Cost of Goods SoldWinter Sports Division | 21,420,000 |
| Cost of Goods SoldSummer Sports Division | 22,780,000 |
| Sales ExpenseWinter Sports Division | 6,120,000 |
| Sales ExpenseSummer Sports Division | 5,440,000 |
| Administrative ExpenseWinter Sports Division | 3,570,000 |
| Administrative ExpenseSummer Sports Division | 3,502,000 |
| Advertising Expense | 1,065,000 |
| Transportation Expense | 378,000 |
| Accounts Receivable Collection Expense | 212,800 |
| Warehouse Expense | 3,400,000 |
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, $500,000; Summer Sports Division, $565,000.
- Transportation expenseallocated to divisions at a rate of $12 per bill of lading: Winter Sports Division, 15,000 bills of lading; Summer Sports Division, 16,500 bills of lading.
- Accounts receivable collection expenseincurred at headquarters, allocated to divisions at a rate of $7 per invoice: Winter Sports Division, 14,000 sales invoices; Summer Sports Division, 16,400 sales invoices.
- Warehouse expenseallocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 180,000 square feet; Summer Sports Division, 220,000 square feet.
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.
| Championship Sports Inc. | ||
| Divisional Income Statements | ||
| For the Year Ended December 31, 20Y9 | ||
| Winter Sports Division | Summer Sports Division | |
| Sales | $ | $ |
| Cost of goods sold | ||
| Gross profit | $ | $ |
| Divisional selling and administrative expenses: | ||
| Divisional selling expenses | $ | $ |
| Divisional administrative expenses | ||
| Total divisional selling and administrative expenses | $ | $ |
| Operating income before support department allocations | $ | $ |
| Support department allocations: | ||
| Advertising expense | $ | $ |
| Transportation expense | ||
| Accounts receivable collection expense | ||
| Warehouse expense | ||
| Total support department allocations | $ | $ |
| Operating income | $ | $ |
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.
| Championship Sports Inc. | |||
| Support Department Allocations | |||
| For the Year Ended December 31, 20Y9 | |||
| Winter Sports Division | Summer 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 | $ | $ | $ |
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