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 balance as of December 31, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:

SalesWinter Sports Division	$34,650,000
SalesSummer Sports Division	38,280,000
Cost of Goods SoldWinter Sports Division	20,790,000
Cost of Goods SoldSummer Sports Division	22,110,000
Sales ExpenseWinter Sports Division	5,940,000
Sales ExpenseSummer Sports Division	5,280,000
Administrative ExpenseWinter Sports Division	3,465,000
Administrative ExpenseSummer Sports Division	3,399,000
Advertising Expense	886,000
Transportation Expense	467,200
Accounts Receivable Collection Expense	252,000
Warehouse Expense	3,300,000

The bases to be used in allocating expenses, together with other essential information, are as follows:

1. Advertising expenseincurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $416,000; Summer Sports Division, $470,000.
2. Transportation expensecharged back to divisions at a charge rate of $16 per bill of lading: Winter Sports Division, 13,900 bills of lading; Summer Sports Division, 15,300 bills of lading.
3. Accounts receivable collection expenseincurred at headquarters, charged back to divisions at a charge rate of $9 per invoice: Winter Sports Division, 12,900 sales invoices; Summer Sports Division, 15,100 sales invoices.
4. Warehouse expensecharged back 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.

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.

Glades Sporting Goods Co. Divisional Income Statements For the Year Ended December 31, 20Y8

	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	$___	$___
Income from operations before service department charges	$___	$___
Service department charges:
Advertising expense	$___	$___
Transportation expense	___	___
Accounts receivable collection expense	___	___
Warehouse expense	___	___
Total service department charges	$___	$___
Income from operations	$___	$___

Question Content Area

Provide supporting schedules for determining service department charges. If required, round per unit amounts to two decimal places and final answers to the nearest dollar.

Glades Sporting Goods Co. Service Department Charges For the Year Ended December 31, 20Y8

	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	$___	$___	$___