Question Content Area

Divisional income statements with support department allocations

Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments, Tech Services and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows:

Line Item Description	Amount
Tech Services Department	$1,004,400
Purchasing Department	489,000
Other corporate administrative expenses	642,000
Total expense	$2,135,400

The other corporate administrative expenses include officers salaries and other expenses required by the corporation. The Tech Services Department allocates costs to the divisions based on the number of computers in the department, and the Purchasing Department allocates costs to the divisions based on the number of purchase orders for each department. The services used by the two divisions are as follows:

Line Item Description	Tech Services	Purchasing
Consumer Division	380 computers	5,700 purchase orders
Commercial Division	240	10,600
Total	620 computers	16,300 purchase orders

The support department allocations of the Tech Services Department and the Purchasing Department are considered controllable by the divisions. Corporate administrative expenses are not considered controllable by the divisions. The revenues, cost of goods sold, and operating expenses for the two divisions are as follows:

Line Item Description	Consumer	Commercial
Revenues	$9,250,900	$8,190,500
Cost of goods sold	5,139,400	4,135,800
Operating expenses	1,814,600	2,047,400

Prepare the divisional income statements for the two divisions. Do not round your interim calculations.

Line Item Description	Consumer Division	Commercial Division
Gross profitCashOperating expensesOperating incomeRevenues	$- Select -	$- Select -
CashCost of goods soldGross profitOperating incomeTech service department	- Select -	- Select -
CashGross profitLoss from operationsOperating expensesRevenues	$- Select -	$- Select -
CashLoss from operationsOperating expensesOperating incomePurchasing department	- Select -	- Select -
Operating income before support department allocations	$Operating income before support department allocations	$Operating income before support department allocations
Support department allocations:
CashCost of goods soldOperating expensesOperating incomeTech service department	$- Select -	$- Select -
CashGross profitOperating expensesOperating incomePurchasing department	- Select -	- Select -
Total support department allocations	$Total support department allocations	$Total support department allocations
Gross profitOperating incomeOperating income before service department chargesLoss from operations	$- Select -	$- Select -