Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 2016, are as follows:

Tech Support Department $ 516,000

Purchasing Department 89,600

Other corporate administrative expenses 560,000

Total corporate expense $1,165,600

The other corporate administrative expenses include officers salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department charges divisions for services, based on the number of purchase orders for each department. The usage of service by the two divisions is as follows:

Tech Support Purchasing

Consumer Division 375 computers 1,960 purchase orders

Commercial Division 225 3,640

Total 600 computers 5,600 purchase orders

The service department charges of the Tech Support 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:

Consumer Commercial

Revenues $7,430,000 $6,184,000

Cost of goods sold 4,123,000 3,125,000

Operating expenses 1,465,000 1,546,000

Prepare the divisional income statements for the two divisions. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries.

Labels and Amount Descriptions

Labels

Service department charges

Amount Descriptions

Advertising Department

Cost of goods sold

Gross profit

Income from operations

Income from operations before service department charges

Operating expenses

Purchasing Department

Revenues

Selling expenses

Tech Support Department

Divisional Income Statements

Prepare the divisional income statements.

YOZAMBA TECHNOLOGY

Divisional Income Statements

For the Year Ended December 31, 2016

Consumer Division Commercial Division

1

2

3

4

5

6

7 (Label)

8

9

10 Total service department charges

11 Income from operations