Question
Profit Center Responsibility Reporting XSport Sporting Goods Co. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts
Profit Center Responsibility Reporting
XSport 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, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:
| SalesWinter Sports Division | $39,900,000 |
| SalesSummer Sports Division | 44,080,000 |
| Cost of Goods SoldWinter Sports Division | 23,940,000 |
| Cost of Goods SoldSummer Sports Division | 25,460,000 |
| Sales ExpenseWinter Sports Division | 6,840,000 |
| Sales ExpenseSummer Sports Division | 6,080,000 |
| Administrative ExpenseWinter Sports Division | 3,990,000 |
| Administrative ExpenseSummer Sports Division | 3,914,000 |
| Advertising Expense | 1,061,000 |
| Transportation Expense | 377,000 |
| Accounts Receivable Collection Expense | 250,200 |
| Warehouse Expense | 3,800,000 |
The bases to be used in allocating expenses, together with other essential information, are as follows:
- Advertising expenseincurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $498,000; Summer Sports Division, $563,000.
- Transportation expensecharged 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.
- Accounts receivable collection expenseincurred at headquarters, charged back to divisions at a charge rate of $9 per invoice: Winter Sports Division, 12,800 sales invoices; Summer Sports Division, 15,000 sales invoices.
- 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.
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.
| XSport Sporting Goods Co. | ||
| 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 | $ | $ |
| 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 | $ | $ |
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.
| XSport Sporting Goods Co. | |||
| Service Department Charges | |||
| 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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Financial Accounting Principles V4 0 And AME Engage
Authors: Joffe Parker
4th Edition
1926751728, 978-1926751726
