Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate costs for the year ended December 31, 20Y7, are as follows: Tech Support Department $336,000 Purchasing Department 67,500 Other corporate administrative costs 448,000 Total corporate costs $851,500   The other corporate administrative costs include officers’ salaries and miscellaneous smaller costs required by the corporation. The Tech Support Department allocates the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department allocates 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 300 computers 1,800 purchase orders Commercial Division 180   2,700       Total 480 computers 4,500 purchase orders   The service department allocations of the Tech Support Department and the Purchasing Department are considered controllable by the divisions. Corporate administrative costs 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 $5,900,000   $4,950,000   Cost of goods sold 3,304,000   2,475,000   Operating expenses 1,180,000   1,237,500     Prepare the divisional income statements for the two divisions. Round your interim calculations to three decimal places, if required.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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  1. Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate costs for the year ended December 31, 20Y7, are as follows:

    Tech Support Department $336,000
    Purchasing Department 67,500
    Other corporate administrative costs 448,000
    Total corporate costs $851,500

     

    The other corporate administrative costs include officers’ salaries and miscellaneous smaller costs required by the corporation. The Tech Support Department allocates the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department allocates 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 300 computers 1,800 purchase orders
    Commercial Division 180   2,700  
        Total 480 computers 4,500 purchase orders

     

    The service department allocations of the Tech Support Department and the Purchasing Department are considered controllable by the divisions. Corporate administrative costs 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 $5,900,000   $4,950,000  
    Cost of goods sold 3,304,000   2,475,000  
    Operating expenses 1,180,000   1,237,500  

     

    Prepare the divisional income statements for the two divisions. Round your interim calculations to three decimal places, if required.

    GRAEL TECHNOLOGYDivisional Income StatementsFor the Year Ended December 31, 20Y7
        Consumer
    Division
      Commercial
    Division
     
      $- Select -   $- Select -
     
      - Select -   - Select -
     
      $- Select -   $- Select -
     
      - Select -   - Select -
    Income from operations before service department allocations   $fill in the blank 13   $fill in the blank 14
    Less service department cost allocations:        
     
    $- Select -   $- Select -  
     
    - Select - - Select - - Select - - Select -
     
      $- Select -   $- Select -
     
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