Q1. Divisional Income Statements

The following data were summarized from the accounting records for South Seas Coast Construction Company for the year ended June 30, 20Y8.

Cost of goods sold:			Service department charges:
	Commercial Division	$579,960			Commercial Division	$79,080
	Residential Division	280,490			Residential Division	48,580
Administrative expenses:			Sales:
	Commercial Division	$105,450			Commercial Division	$878,720
	Residential Division	100,170			Residential Division	500,870

Prepare divisional income statements for South Seas Coast Construction Company.

	Commercial Division	Residential Division
Administrative expensesCost of goods soldIncome from operations before service department allocationsSalesService department allocations	$- Select -	$- Select -
Administrative expensesCost of goods soldGross profitSalesService department allocations	- Select -	- Select -
Gross profitGross lossIncome from operationsSalesService department allocations	$- Select -	$- Select -
Administrative expensesCost of goods soldGross profitSalesService department allocations	- Select -	- Select -
Cost of goods soldGross profitIncome from operations before service department allocationsSalesService department allocations	$- Select -	$- Select -
Administrative expensesGross profitLoss from operationsSalesService department allocations	- Select -	- Select -
Administrative expensesGross profitIncome from operationsIncome from operations before service department allocationsLoss from operations	$- Select -	$- Select -

Q2. Service Department Allocations and Cost Drivers

Middler Corporation, a manufacturer of electronics and communications systems, allocates Computing and Communications Services (CCS) service department costs to profit centers. The following table lists service categories and cost drivers used by the CCS department. The table also includes cost and cost drivers for each service for October.

CCS Service Category	Cost Driver	Budgeted Cost	Budgeted Cost Driver Quantity
Help desk	Number of calls	$126,140		3,400
Network center	Number of devices monitored	627,750		9,300
Electronic mail	Number of user accounts	61,500		6,150
Handheld technology support	Number of handheld devices issued	139,200		8,700

One of the profit centers for Middler Corporation is the Communication Systems (COMM) sector. Assume the following information for the COMM sector:

• The sector has 1,000 employees, of whom 40% are office employees.
• Almost all office employees (80%) have a computer on the network.
• 95 percent of the employees with a computer also have an e-mail account.
• The average number of help desk calls for October was 1 calls per individual with a computer.
• There are 290 additional printers, servers, and peripherals on the network beyond the personal computers.
• All the nonoffice employees have been issued a handheld device.

a. Determine the service allocation rate for the four CCS service categories for October. Round your answers to two decimal places.

CCS Service Category	Service Allocation Rate
Help desk	$fill in the blank 1	Per callPer device monitoredPer user or e-mail accountPer employeePer device
Network center	$fill in the blank 3	Per callPer device monitoredPer user or e-mail accountPer employeePer device
Electronic mail	$fill in the blank 5	Per callPer device monitoredPer user or e-mail accountPer employeePer device
Handheld technology support	$fill in the blank 7	Per callPer device monitoredPer user or e-mail accountPer employeePer device

b. Determine the allocations to the COMM sector for the four CCS service categories for October.

October allocations to the COMM sector:
Help desk allocation	$fill in the blank 9
Network center allocation	$fill in the blank 10
Electronic mail allocation	$fill in the blank 11
Handheld technology support	$fill in the blank 12

Q3. Return on Investment

The income from operations and the amount of invested assets in each division of Shiner Industries are as follows:

	Income from Operations	Invested Assets
Retail Division	$131,400		$730,000
Commercial Division	114,000		570,000
Internet Division	77,000		550,000

a. Compute the return on investment for each division. Round to the nearest whole number.

Division	Percent
Retail Division	fill in the blank 1%
Commercial Division	fill in the blank 2%
Internet Division	fill in the blank 3%

Q4. Residual Income

The income from operations and the amount of invested assets in each division of Shiner Industries are as follows:

	Income from Operations	Invested Assets
Retail Division	$107,800		$490,000
Commercial Division	177,600		740,000
Internet Division	59,400		330,000

Assume that management has established an 10% minimum acceptable return for invested assets.

a. Determine the residual income for each division.

	Retail Division	Commercial Division	Internet Division
Income from operations	$107,800	$177,600	$59,400
Minimum amount of income from operations	fill in the blank 1		fill in the blank 2		fill in the blank 3
Residual income	$fill in the blank 4		$fill in the blank 5		$fill in the blank 6

Q5. 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	$35,910,000
SalesSummer Sports Division	39,672,000
Cost of Goods SoldWinter Sports Division	21,546,000
Cost of Goods SoldSummer Sports Division	22,914,000
Sales ExpenseWinter Sports Division	6,156,000
Sales ExpenseSummer Sports Division	5,472,000
Administrative ExpenseWinter Sports Division	3,591,000
Administrative ExpenseSummer Sports Division	3,522,600
Advertising Expense	1,018,000
Transportation Expense	525,600
Accounts Receivable Collection Expense	196,000
Warehouse Expense	3,420,000

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

1. Advertising expenseincurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $478,000; Summer Sports Division, $540,000.
2. Transportation expenseallocated to divisions at an allocation rate of $18 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, allocated to divisions at an allocation rate of $7 per invoice: Winter Sports Division, 12,900 sales invoices; Summer Sports Division, 15,100 sales invoices.
4. Warehouse expenseallocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 160,000 square feet; Summer Sports Division, 200,000 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.

	Winter Sports Division	Summer Sports Division
Sales	$fill in the blank 5aaac701302e008_1	$fill in the blank 5aaac701302e008_2
Cost of goods sold	fill in the blank 5aaac701302e008_3	fill in the blank 5aaac701302e008_4
Gross profit	$fill in the blank 5aaac701302e008_5	$fill in the blank 5aaac701302e008_6
Divisional selling and administrative expenses:	blank	blank
Divisional selling expenses	$fill in the blank 5aaac701302e008_7	$fill in the blank 5aaac701302e008_8
Divisional administrative expenses	fill in the blank 5aaac701302e008_9	fill in the blank 5aaac701302e008_10
Total divisional selling and administrative expenses	$fill in the blank 5aaac701302e008_11	$fill in the blank 5aaac701302e008_12
Income from operations before service department allocations	$fill in the blank 5aaac701302e008_13	$fill in the blank 5aaac701302e008_14
Less service department cost allocations:
Advertising expense	$fill in the blank 5aaac701302e008_15	$fill in the blank 5aaac701302e008_16
Transportation expense	fill in the blank 5aaac701302e008_17	fill in the blank 5aaac701302e008_18
Accounts receivable collection expense	fill in the blank 5aaac701302e008_19	fill in the blank 5aaac701302e008_20
Warehouse expense	fill in the blank 5aaac701302e008_21	fill in the blank 5aaac701302e008_22
Total	$fill in the blank 5aaac701302e008_23	$fill in the blank 5aaac701302e008_24
Income from operations	$fill in the blank 5aaac701302e008_25	$fill in the blank 5aaac701302e008_26

Question Content Area

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

	Winter Sports Division	Summer Sports Division	Total
Advertising expense	$fill in the blank 0cf7b3fcd04007e_1	$fill in the blank 0cf7b3fcd04007e_2	$fill in the blank 0cf7b3fcd04007e_3
Transportation rate per bill of lading	$fill in the blank 0cf7b3fcd04007e_4	$fill in the blank 0cf7b3fcd04007e_5
Number of bills of lading	fill in the blank 0cf7b3fcd04007e_6	fill in the blank 0cf7b3fcd04007e_7
Transportation expense	$fill in the blank 0cf7b3fcd04007e_8	$fill in the blank 0cf7b3fcd04007e_9	$fill in the blank 0cf7b3fcd04007e_10
Accounts receivable collection rate	$fill in the blank 0cf7b3fcd04007e_11	$fill in the blank 0cf7b3fcd04007e_12
Number of sales invoices	fill in the blank 0cf7b3fcd04007e_13	fill in the blank 0cf7b3fcd04007e_14
Accounts receivable collection expense	$fill in the blank 0cf7b3fcd04007e_15	$fill in the blank 0cf7b3fcd04007e_16	$fill in the blank 0cf7b3fcd04007e_17
Warehouse rate per sq. ft.	$fill in the blank 0cf7b3fcd04007e_18	$fill in the blank 0cf7b3fcd04007e_19
Number of square feet	fill in the blank 0cf7b3fcd04007e_20	fill in the blank 0cf7b3fcd04007e_21
Warehouse expense	$fill in the blank 0cf7b3fcd04007e_22	$fill in the blank 0cf7b3fcd04007e_23	$fill in the blank 0cf7b3fcd04007e_24