Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: Wild Sun Airlines Inc. Divisional Income Statements For the Year Ended December 31, 20Y9 Revenues Operating expenses Income from operations before Passenger Division Cargo Division $2,738,000 $2,738,000 2,216,500 2,474,900 $521,500 $263,100 service department allocations Less service department cost allocations: Training $117,500 $117,500 Flight scheduling Reservations 99,000 132,000 99,000 348,500 132,000 348,500 Income from operations $173,000 $(85,400) The service department allocations rate for the service department costs was based on revenues. Because the revenues of the two divisions were the same, the service department allocations to each division were also the same. The following additional information is available: Number of personnel trained Number of flights Number of reservations requested Passenger Division Cargo Total Division 360 140 500 380 520 900 17,600 0 17,600 b. Correct the divisional income statements, using the cost drivers provided in revising the service department cost allocations. If an amount box does not require an entry, leave it blank. Do not round your interim calculations. Wild Sun Airlines Inc. Divisional Income Statements For the Year Ended December 31, 20Y9 Passenger Division Revenues Operating expenses Income from operations before service department allocations Less service department cost allocations: Training Flight scheduling Reservations Income from operations Cargo Division

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the
Cargo Division. The following divisional income statements were prepared:
Wild Sun Airlines Inc.
Divisional Income Statements
For the Year Ended December 31, 20Y9
Revenues
Operating expenses
Income from operations before
Passenger
Division
Cargo
Division
$2,738,000
$2,738,000
2,216,500
2,474,900
$521,500
$263,100
service department allocations
Less service department cost allocations:
Training
$117,500
$117,500
Flight scheduling
Reservations
99,000
132,000
99,000
348,500 132,000
348,500
Income from operations
$173,000
$(85,400)
The service department allocations rate for the service department costs was based on revenues.
Because the revenues of the two divisions were the same, the service department allocations to each
division were also the same.
The following additional information is available:
Number of personnel trained
Number of flights
Number of reservations requested
Passenger
Division
Cargo
Total
Division
360
140
500
380
520
900
17,600
0
17,600
b. Correct the divisional income statements, using the cost drivers provided in revising the service
department cost allocations. If an amount box does not require an entry, leave it blank. Do not
round your interim calculations.
Wild Sun Airlines Inc.
Divisional Income Statements
For the Year Ended December 31, 20Y9
Passenger
Division
Revenues
Operating expenses
Income from operations before service department allocations
Less service department cost allocations:
Training
Flight scheduling
Reservations
Income from operations
Cargo Division
Transcribed Image Text:Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: Wild Sun Airlines Inc. Divisional Income Statements For the Year Ended December 31, 20Y9 Revenues Operating expenses Income from operations before Passenger Division Cargo Division $2,738,000 $2,738,000 2,216,500 2,474,900 $521,500 $263,100 service department allocations Less service department cost allocations: Training $117,500 $117,500 Flight scheduling Reservations 99,000 132,000 99,000 348,500 132,000 348,500 Income from operations $173,000 $(85,400) The service department allocations rate for the service department costs was based on revenues. Because the revenues of the two divisions were the same, the service department allocations to each division were also the same. The following additional information is available: Number of personnel trained Number of flights Number of reservations requested Passenger Division Cargo Total Division 360 140 500 380 520 900 17,600 0 17,600 b. Correct the divisional income statements, using the cost drivers provided in revising the service department cost allocations. If an amount box does not require an entry, leave it blank. Do not round your interim calculations. Wild Sun Airlines Inc. Divisional Income Statements For the Year Ended December 31, 20Y9 Passenger Division Revenues Operating expenses Income from operations before service department allocations Less service department cost allocations: Training Flight scheduling Reservations Income from operations Cargo Division
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