Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments, Tech Services and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Services Department Purchasing Department $951,600 462,000 Other corporate administrative expenses Total expense 608,000 $2,021,600 The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech Services Department allocates costs to the divisions based on the number of computers in the department, and the Purchasing Department allocates costs to the divisions based on the number of purchase orders for each department. The services used by the two divisions are as follows: Consumer Division Commercial Division Total Tech Services 480 computers 300 780 computers Purchasing 5,400 purchase orders 10,000 15,400 purchase orders The support department allocations of the Tech Services 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 $8,792,100 $7,717,600 Cost of goods sold Operating expenses 4,884,500 1,724,600 3,897,000 1,929,200 Prepare the divisional income statements for the two divisions. Do not round your interim calculations. Prepare the divisional income statements for the two divisions. Do not round your interim calculations. Horton Technology Divisional Income Statements For the Year Ended December 31, 2017 Revenues Cost of goods sold Gross profit Operating expenses ✓ Operating income before support department allocations Support department allocations: Tech service department Purchasing department Total support department allocations Operating income Consumer Division Commercial Division 0000
Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments, Tech Services and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Services Department Purchasing Department $951,600 462,000 Other corporate administrative expenses Total expense 608,000 $2,021,600 The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech Services Department allocates costs to the divisions based on the number of computers in the department, and the Purchasing Department allocates costs to the divisions based on the number of purchase orders for each department. The services used by the two divisions are as follows: Consumer Division Commercial Division Total Tech Services 480 computers 300 780 computers Purchasing 5,400 purchase orders 10,000 15,400 purchase orders The support department allocations of the Tech Services 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 $8,792,100 $7,717,600 Cost of goods sold Operating expenses 4,884,500 1,724,600 3,897,000 1,929,200 Prepare the divisional income statements for the two divisions. Do not round your interim calculations. Prepare the divisional income statements for the two divisions. Do not round your interim calculations. Horton Technology Divisional Income Statements For the Year Ended December 31, 2017 Revenues Cost of goods sold Gross profit Operating expenses ✓ Operating income before support department allocations Support department allocations: Tech service department Purchasing department Total support department allocations Operating income Consumer Division Commercial Division 0000
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 7E: Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments,...
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