Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...

Divisional Income Statements with Service Department Charges

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 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	490	computers	6,200	purchase orders
Commercial Division	310		11,500
Total	800	computers	17,700	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	$10,581,800	$8,792,100
Cost of goods sold	5,878,800	4,439,600
Operating expenses	2,075,600	2,197,800

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

Yozamba Technology
Divisional Income Statements
For the Year Ended December 31, 20Y7
	Consumer Division	Commercial Division
	$	$

	$	$

Income from operations before service department charges	$	$
Service department charges:
	$	$

Total service department charges	$	$
	$	$

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Expert Solution


Divisional Income Statements
For the Year Ended December 31, 20Y7	Amount in $
	Consumer Division	Commercial Division
Revenues	10,581,800	8,792,100
Less: Cost of goods sold	5,878,800	4,439,600
Less: Operating expenses	2,075,600	2,197,800
Income from operations before service department charges	2,627,400	2,154,700
Less :Service department charges:
Tech Support Department	744,800	471,200
Purchasing Department	155,000	287,500
Total service department charges	899,800	758,700
Divisional Income	1,727,600	1,396,000

Working:-Allocation

Tech Support Department
Consumer division	$ 744,800	(1,216,000 x 490 ) / 800
Commercial division	$ 471,200	(1,216,000 x 310 ) / 800

Purchasing Department
Consumer division	$ 155,000	(442,500 x 6,200) / 17,700
Commercial division	$ 287,500	(442,500 x 11,500 ) / 17,700

ekkarill92 answered 1 year ago

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