Profit Center Responsibility Reporting

Hutchinson Sports Co. operates two divisionsthe Action Sports Division and the Team Sports Division. The following income and expense accounts were provided as of November 30, 20Y1, the end of the current fiscal year, after all adjustments, including those for inventories, were recorded:

SalesAction Sports (AS) Division	$9,250,000
SalesTeam Sports (TS) Division	15,300,000
Cost of Goods SoldAction Sports (AS) Division	5,350,000
Cost of Goods SoldTeam Sports (TS) Division	9,600,000
Sales ExpenseAction Sports (AS) Division	750,000
Sales ExpenseTeam Sports (TS) Division	1,050,000
Administrative ExpenseAction Sports (AS) Division	625,000
Administrative ExpenseTeam Sports (TS) Division	725,000
Advertising Expense	1,500,000
Transportation Expense	327,450
Accounts Receivable Collection Expense	200,250
Warehouse Expense	400,000

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: Action Sports Division, $600,000; Team Sports Division, $900,000.
2. Transportation expensecharged back to divisions at a charge rate of $18.50 per bill of lading: Action Sports Division, 7,000 bills of lading; Team Sports Division, 10,700 bills of lading.
3. Accounts receivable collection expenseincurred at headquarters, charged back to divisions at a charge rate of $9.00 per invoice: Action Sports Division, 16,000 sales invoices; Team Sports Division, 6,250 sales invoices.
4. Warehouse expensecharged back to divisions on the basis of floor space used in storing division products: Action Sports Division, 60,000 square feet; Team Sports Division, 40,000 square feet.

Question Content Area

Prepare divisional income statements with two column headings: Action Sports Division and Team Sports Division.

HUTCHINSON SPORTS CO. Divisional Income Statements For the Year Ended November 30, 20Y1

	Action Sports Division	Team Sports Division
Divisional selling expensesGross profitSalesSales	$Sales	$Sales
Cost of goods soldDivisional administrative expensesDivisional selling expensesCost of goods sold	Cost of goods sold	Cost of goods sold
Cost of goods soldGross profitSalesGross profit	$Gross profit	$Gross profit
Accounts receivable collection expenseAdvertising expenseDivisional selling expensesDivisional selling expenses	$Divisional selling expenses	$Divisional selling expenses
Divisional administrative expensesTransportation expenseWarehouse expenseDivisional administrative expenses	Divisional administrative expenses	Divisional administrative expenses
	$fill in the blank 407f02ff5fd7f9f_16	$fill in the blank 407f02ff5fd7f9f_17
Operating income before service department charges	$fill in the blank 407f02ff5fd7f9f_18	$fill in the blank 407f02ff5fd7f9f_19
Less service department charges:
Advertising expenseCost of goods soldDivisional administrative expensesAdvertising expense	$Advertising expense	$Advertising expense
Divisional selling expensesGross profitTransportation expenseTransportation expense	Transportation expense	Transportation expense
Accounts receivable collection expenseCost of goods soldDivisional administrative expensesAccounts receivable collection expense	Accounts receivable collection expense	Accounts receivable collection expense
Divisional selling expensesSalesWarehouse expenseWarehouse expense	Warehouse expense	Warehouse expense
Total service department charges	$fill in the blank 407f02ff5fd7f9f_32	$fill in the blank 407f02ff5fd7f9f_33
Operating income