Profit Center Responsibility Reporting Glades Sporting Goods Co. operates two divisions-the 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: Sales-Winter Sports Division Sales-Summer Sports Division Cost of Goods Sold-Winter Sports Division 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 $38,850,000 42,920,000 23,310,000 24,790,000 6,660,000 5,920,000 3,885,000 3,811,000 965,000 377,000 194,600 3,700,000 Accounts Receivable Collection Expense Warehouse Expense The bases to be used in allocating expenses, together with other essential information, are as follows: a. Advertising expense-incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $453,000; Summer Sports Division, $512,000. b. Transportation expense-charged back to divisions at a charge rate of $13 per bill of lading: Winter Sports Division, 13,800 bills of lading; Summer Sports Division, 15,200 bills of lading. c. Accounts receivable collection expense-incurred at headquarters, charged back to divisions at a charge rate of $7 per invoice: Winter Sports Division, 12,800 sales invoices; Summer Sports Division, 15,000 sales invoices. d. Warehouse expense-charged 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. 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, 2018 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 III Income from operations 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. 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, 2018 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
