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Profit Center Responsibility Reporting Glades Sporting Goods Co. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts
Profit Center Responsibility Reporting Glades Sporting Goods Co. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial palance as of December 31, 2048, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales-Winter Sports Division Sales-Summer Sports Division $12,600,000 16,300,000 Cost of Goods Sold-Winter Sports Division 7,560,000 9,454,000 2,016,000 2,282,000 Cost of Goods Sold-Summer Sports Division Sales Expense-Winter Sports Division Sales Expense-Summer Sports Division Administrative Expense-Winter Sports Division Administrative Expense-Summer Sports Division Advertising Expense Transportation Expense 1,260,000 1,450,700 578,000 265,660 Accounts Receivable Collection Expense 174,000 Warehouse Expense 1,540,000 The bases to be used in allocating expenses, together with other essential information, are as follows: a. Advertising expense-incurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $252,000; Summer Sports Division, $326,000. 5. Transportation expense-allocated to divisions at an allocation rate of $7.40 per bill of lading: Winter Sports Division, 17,200 bills of lading; Summer Sports Division, 18,700 bills of lading c. Accounts receivable collection expense-incurred at headquarters, allocated to divisions at an allocation rate of $6.00 per involce: Winter Sports Division, 11,500 sales invoices; Summer Sports Division, 17,500 sales invoices. the ABONECO c. Accounts receivable collection expense-incurred at headquarters, allocated to divisions at an allocation rate of $6.00 per invoice: Winter Sports Division, 11,500 sales invoices; Summer Sports Division, 17,500 sales involces. d. Warehouse expense-allocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 102,000 square feet; Summer Sports Division, 118,000 square feet Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Round your interim calculations to two decimal places, if required. Glades Sporting Goods Co. Divisional Income Statements For the Year Ended December 31, 20Y8 Winter Sports Summer Sports Division Division Sales 12,600,000 16,300,000 7,560,000 9,454,000 $ 5,040,000 6,846,000 Cost of goods sold Gross profit Divisional selling expenses Divisional administrative expenses 2,016,000 2,282,000 1,260,000 1,450,700 Total divisional expenses 1.764,000 3,113,300 3,276,000 3,732,700 Income from operations before service department allocations Less service department cost allocations: Advertising expense Transportation expense Accounts receivable collection expense 252,000 $ 326,000 Warehouse expense Total Income from operations Division Provide supporting calculations for service department cost allocations. If required, round per unit amounts to two decimal places and final answers to the nearest dollar. Glades Sporting Goods Co. Supporting Calculations For the Year Ended December 31, 2048 Winter Sports 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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