FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 $4,950,000 Cost of goods sold 3,304,000 2,475,000 Operating expenses 1,180,000 1,237,500 GRAEL TECHNOLOGYDivisional Income StatementsFor the Year Ended December 31, 20Y7Prepare the divisional income statements for the two divisions. Round your interim calculations to three decimal places, if required.
Consumer
DivisionCommercial
Division$- 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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