Question

In: Accounting

Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and...

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, 20Y7, are as follows:

Tech Support Department $473,100
Purchasing Department 75,600
Other corporate administrative expenses 555,000
Total corporate expense $1,103,700

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 400 computers 1,960 purchase orders
Commercial Division 170 3,440
Total 570 computers 5,400 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 $7,470,000 $6,186,000
Cost of goods sold 4,109,000 3,119,500
Operating expenses 1,466,000 1,546,000

Required:

Prepare the divisional income statements for the two divisions. Refer to the list of Label and Amount Descriptions for the exact wording of the answer choices for text entries. A colon (:) will fill in where needed.

Solutions

Expert Solution

                                                                                Divisional Income Statement

Consumer Division

Commercial division

Revenues

                7,470,000

              6,186,000

Less: cost of goods sold

                4,109,000

              3,119,500

Gross profit

                3,361,000

              3,066,500

Operating expenses

                1,466,000

              1,546,000

Income from operations before service department
charges

                1,895,000

              1,520,500

Less: Service department charges

Tech support department

                     332,000

           141,100

Purchasing department

                       27,440

                    359,440

             48,160

                  189,260

Income from operations

                1,535,560

              1,331,240

Working notes:

  1. Tech support department charges

Per computer cost = 473100/570 = $ 830 per computer

Allocation as:

Consumer division = 830*400 = 332,000

Commercial division = 830 *170 = 141,100

  1. Purchasing department charges

Per order cost = 75600/5400 = $ 14 per order

Allocation as:

Consumer division = 14*1960 = 27,440

Commercial division = 14*3440 = 48,160

kindly upvote

ekkarill92 answered 5 months ago
Next > < Previous

Related Solutions

Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and...
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, 20Y7, are as follows: Tech Support Department $1,372,800 Purchasing Department 438,000 Other corporate administrative expenses 779,000 Total corporate expense $2,589,800 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,...
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and...
Grael 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, 20Y7, are as follows: Tech Support Department $ 510,300 Purchasing Department 60,500 Other corporate administrative expenses 580,000 Total corporate expense $1,150,800 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...
Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments, Tech Services and Purchasing.
Divisional Income Statements with Support Department AllocationsHorton 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:Tech Services Department$858,000Purchasing Department304,000Other corporate administrative expenses500,000Total expense$1,662,000The 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...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...
Divisional Income Statements with Service Department Charges 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, 20Y7, are as follows: Tech Support Department $772,900 Purchasing Department 235,500 Other corporate administrative expenses 434,000 Total corporate expense $1,442,400 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...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...
Divisional Income Statements with Service Department Charges 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, 20Y7, are as follows: Tech Support Department $1,216,000 Purchasing Department 442,500 Other corporate administrative expenses 713,000 Total corporate expense $2,371,500 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...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...
Divisional Income Statements with Service Department Charges 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, 20Y7, are as follows: Tech Support Department $1,352,000 Purchasing Department 219,000 Other corporate administrative expenses 676,000 Total corporate expense $2,247,000 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...
Divisional Income Statements with Support Department Allocations Horton Technology has two divisions, Consumer and Commercial, and...
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: Tech Services Department $1,318,200 Purchasing Department 304,000 Other corporate administrative expenses 698,000 Total expense $2,320,200 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...
Divisional Income Statements with Support Department Allocations Horton Technology has two divisions, Consumer and Commercial, and...
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: Tech Services Department $1,014,300 Purchasing Department 507,000 Other corporate administrative expenses 654,000 Total expense $2,175,300 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...
E-books, an online book retailer, has two operating departments—corporate sales and consumer sales—and two support departments—human...
E-books, an online book retailer, has two operating departments—corporate sales and consumer sales—and two support departments—human resources and information systems. Each sales department conducts merchandising and marketing operations independently. E-books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The following data are available for September 2017: Support Departments Operating Departments Human Resources Information Systems Corporate Sales Consumer Sales Budgeted costs for each department $72,700 $234,400 $998,270 $489,860 Budgeted Number of Employees...
This problem illustrates how costs of two corporate support departments are allocated to operating divisions using...
This problem illustrates how costs of two corporate support departments are allocated to operating divisions using a dual-rate method. Fixed costs are allocated using budgeted costs and budgeted hours used by other departments. Variable costs are allocated using actual costs and actual hours used by other departments. Seth Gross Horizons budgets the following amounts for its two central corporate support departments (legal and personnel) in supporting each other and the two manufacturing divisions, the Laptop Division (LTD) and the Work...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT