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Stable Enterprises is organized into two geographic divisions (Asia and Europe) and a corporate headquarters. Late in year 7, the Stable Finance Department prepared financial

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Stable Enterprises is organized into two geographic divisions (Asia and Europe) and a corporate headquarters. Late in year 7, the Stable Finance Department prepared financial operating plans (budgets) for the two divisions, shown as follows (in thousands of dollars). Revenues Direct division costs Operating profit before allocation Asia $50,600 25,300 $25,300 Europe $64,400 38,640 $25,760 Corporate overhead costs (in thousands of dollars) are expected to be $30,000 in year 8. Of the $30,000, $18,500 is fixed and $11,500 is variable, with respect to revenue. Division managers are evaluated and compensated in part on division operating profit relative to the budget. Required: a. Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits in each division for year 8 after the corporate costs are allocated? b. At the end of year 8, actual corporate costs incurred (in thousands of dollars) were $19,000. Of the $19,000, $10,500 was fixed. Actual results (in thousands of dollars) in the two divisions are as follows. Asia $50,600 25,300 Revenues Direct costs Operating profit before allocation Europe $64,400 38,640 $25,760 $ 25,300 What are the operating profits in each division for year 8 after the corporate costs are allocated? Required A Required B Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits in each division for year 8 after the corporate costs are allocated? (Do not round intermediate calculations.) Asia Europe Total Revenues $ 0 $ 0 $ Direct costs Operating profit before allocations Corporate costs Operating profit $ 0 $ 0 $ 0 Required A Required B What are the operating profits in each division for year 8 after the corporate costs are allocated? (Do not round intermediate calculations.) Asia Europe Total Revenues Direct costs | $ 0 $ 0 $ Operating profit before allocations Corporate costs Operating profit $ 0 $ 0 $ 0

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