Championship Sports Inc. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the
The bases to be used in allocating expenses, together with other information, are as follows:
a. Advertising expense—incurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $375,000; Summer Sports Division, $715,000.
b. Transportation expense—allocated to divisions at a rate of $4.00 per bill of lading: Winter Sports Division, 17,500 bills of lading; Summer Sports Division, 30,500 bills of lading.
c. Accounts receivable collection expense—incurred at headquarters, allocated to divisions at a rate of $1.00 per invoice: Winter Sports Division, 25,000 sales invoices; Summer Sports Division, 43,000 sales invoices.
d. Warehouse expense—allocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 60,000 square feet; Summer Sports Division, 90,000 square feet.
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Provide supporting computations for support department allocations.
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Managerial Accounting
- Service department charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of 64,560, and the Purchasing Department had expenses of 40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: A. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. B. Using the cost driver information in (A), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. C. Why does the Residential Division have a larger support department allocation than the other two divisions, even though its sales are lower?arrow_forwardIn divisional income statements prepared for Iguana Construction Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll checks, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $62,704, and the Purchasing Department had expenses of $31,860 for the year. The following annual data for the Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $666,000 $883,000 $2,026,000 Number of employees: Weekly payroll (52 weeks per year) 125 75 80 Monthly payroll 28 39 26 Number of purchase requisitions per year 2,300 1,600 1,500 Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract divisions from…arrow_forwardlades Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales—Winter Sports Division $12,600,000 Sales—Summer Sports Division 16,300,000 Cost of Goods Sold—Winter Sports Division 7,560,000 Cost of Goods Sold—Summer Sports Division 9,454,000 Sales Expense—Winter Sports Division 2,016,000 Sales Expense—Summer Sports Division 2,282,000 Administrative Expense—Winter Sports Division 1,260,000 Administrative Expense—Summer Sports Division 1,450,700 Advertising Expense 578,000 Transportation Expense 265,660 Accounts Receivable Collection Expense 174,000 Warehouse Expense 1,540,000 The bases to be used in allocating expenses, together with other essential information, are as follows: Advertising…arrow_forward
- Service Department Charges In divisional income statements prepared for LeFevre Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $63,492, and the Purchasing Department had expenses of $26,840 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $561,000 $743,000 $1,707,000 Number of employees: Weekly payroll (52 weeks per year) 205 85 90 Monthly payroll 36 47 34 Number of purchase requisitions per year 2,600 1,800 1,700 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential Commercial…arrow_forwardGlades Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales—Winter Sports Division $33,600,000 Sales—Summer Sports Division 37,120,000 Cost of Goods Sold—Winter Sports Division 20,160,000 Cost of Goods Sold—Summer Sports Division 21,440,000 Sales Expense—Winter Sports Division 5,760,000 Sales Expense—Summer Sports Division 5,120,000 Administrative Expense—Winter Sports Division 3,360,000 Administrative Expense—Summer Sports Division 3,296,000 Advertising Expense 1,037,000 Transportation Expense 503,200 Accounts Receivable Collection Expense 198,800 Warehouse Expense 3,200,000 The bases to be used in allocating expenses, together with other essential information, are as follows: Advertising…arrow_forwardeBook Service Department Charges In divisional income statements prepared for Iguana Construction Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll checks, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $46,248, and the Purchasing Department had expenses of $26,840 for the year. The following annual data for the Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $561,000 $743,000 $1,707,000 Number of employees: Weekly payroll (52 weeks per year) 130 70 75 Monthly payroll 28 39 26 Number of purchase requisitions per year 2,600 1,800 1,700 a. Determine the total amount of payroll checks and purchase requisitions processed per year by each division and the company in total.…arrow_forward
- Glades Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales—Winter Sports Division $12,600,000 Sales—Summer Sports Division 16,300,000 Cost of Goods Sold—Winter Sports Division 7,560,000 Cost of Goods Sold—Summer Sports Division 9,454,000 Sales Expense—Winter Sports Division 2,016,000 Sales Expense—Summer Sports Division 2,282,000 Administrative Expense—Winter Sports Division 1,260,000 Administrative Expense—Summer Sports Division 1,450,700 Advertising Expense 578,000 Transportation Expense 265,660 Accounts Receivable Collection Expense 174,000 Warehouse Expense 1,540,000 The bases to be used in allocating expenses, together with other essential information, are as follows: A.…arrow_forwardGlades Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales—Winter Sports Division $25,200,000 Sales—Summer Sports Division 27,840,000 Cost of Goods Sold—Winter Sports Division 15,120,000 Cost of Goods Sold—Summer Sports Division 16,080,000 Sales Expense—Winter Sports Division 4,320,000 Sales Expense—Summer Sports Division 3,840,000 Administrative Expense—Winter Sports Division 2,520,000 Administrative Expense—Summer Sports Division 2,472,000 Advertising Expense 958,000 Transportation Expense 419,900 Accounts Receivable Collection Expense 279,000 Warehouse Expense 2,400,000 The bases to be used in allocating expenses, together with other essential information, are as follows: Advertising…arrow_forwardGlades Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales—Winter Sports Division $33,075,000 Sales—Summer Sports Division 36,540,000 Cost of Goods Sold—Winter Sports Division 19,845,000 Cost of Goods Sold—Summer Sports Division 21,105,000 Sales Expense—Winter Sports Division 5,670,000 Sales Expense—Summer Sports Division 5,040,000 Administrative Expense—Winter Sports Division 3,307,500 Administrative Expense—Summer Sports Division 3,244,500 Advertising Expense 1,025,000 Transportation Expense 411,600 Accounts Receivable Collection Expense 197,400 Warehouse Expense 3,150,000 The bases to be used in allocating expenses, together with other essential information, are as follows: Advertising…arrow_forward
- Service Department Charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $45,336, and the Purchasing Department had expenses of $23,320 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $ 487,000 $ 646,000 $ 1,483,000 Number of employees: Weekly payroll (52 weeks per year) 140 60 65 Monthly payroll 34 45 32 Number of purchase requisitions per year 2,200 1,600 1,500 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential…arrow_forwardIn divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $48,024, and the Purchasing Department had expenses of $22,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Line Item Description Residential Commercial Government Contract Sales $460,000 $609,000 $1,399,000 Number of employees: Weekly payroll (52 weeks per year) 110 85 90 Monthly payroll 30 41 28 Number of purchase requisitions per year 2,100 1,500 1,400 Required: a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Line Item Description Residential Commercial…arrow_forwardIn divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $51,792, and the Purchasing Department had expenses of $22,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $ 460,000 $ 609,000 $ 1,399,000 Number of employees: Weekly payroll (52 weeks per year) 170 65 70 Monthly payroll 36 47 34 Number of purchase requisitions per year 2,100 1,500 1,400 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential Commercial Government Contract…arrow_forward
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