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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 $1,072,800 Purchasing Department 244,500 Other corporate administrative expenses 566,000 Total corporate expense $1,883,300 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 440 computers 5,700 purchase orders Commercial Division 280 10,600 Total 720 computers 16,300 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 $8,715,600 $6,677,100 Cost of goods sold 4,842,000 3,371,600 Operating expenses 1,709,600 1,669,100 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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