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 trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales—Winter Sports Division $8,900,000 Sales—Summer Sports Division 16,400,000 Cost of Goods Sold—Winter Sports Division 5,000,000 Cost of Goods Sold—Summer Sports Division 9,000,000 Sales Expense—Winter Sports Division 650,000 Sales Expense—Summer Sports Division 1,200,000 Administrative Expense—Winter Sports Division 800,000 Administrative Expense—Summer Sports Division 1,450,000 Advertising Expense 1,090,000 Transportation Expense 192,000 Accounts Receivable Collection Expense 68,000 Warehouse Expense 1,800,000 The bases to be used in allocating expenses, together with other information, are as follows: Advertising expense—incurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $375,000; Summer Sports Division, $715,000. 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. 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. 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

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 9E: Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports...

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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 trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:

Sales—Winter Sports Division	$8,900,000
Sales—Summer Sports Division	16,400,000
Cost of Goods Sold—Winter Sports Division	5,000,000
Cost of Goods Sold—Summer Sports Division	9,000,000
Sales Expense—Winter Sports Division	650,000
Sales Expense—Summer Sports Division	1,200,000
Administrative Expense—Winter Sports Division	800,000
Administrative Expense—Summer Sports Division	1,450,000
Advertising Expense	1,090,000
Transportation Expense	192,000
Accounts Receivable Collection Expense	68,000
Warehouse Expense	1,800,000

The bases to be used in allocating expenses, together with other information, are as follows:

Advertising expense—incurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $375,000; Summer Sports Division, $715,000.
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.
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.
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. Round your interim calculations to two decimal places, if required.

Championship Sports Inc.
Divisional Income Statements
For the Year Ended December 31, 20Y9
	Winter Sports Division	Summer Sports Division
Sales
Cost of goods sold
Gross profit
Divisional selling and administrative expenses:
Divisional selling expenses
Divisional administrative expenses
Total divisional selling and administrative expenses
Operating income before support department allocations
Support department allocations:
Advertising expense
Transportation expense
Accounts receivable collection expense
Warehouse expense
Total support department allocations
Operating income

Provide supporting calculations for support department allocations. If required, round per unit amounts to two decimal places and final answers to the nearest dollar.

Championship Sports Inc.
Support Department Allocations
For the Year Ended December 31, 20Y9
	Winter Sports Division	Summer Sports Division	Total
Advertising expense
Transportation rate per bill of lading
Number of bills of lading
Transportation expense
Accounts receivable collection rate
Number of sales invoices
Accounts receivable collection expense
Warehouse rate per sq. ft.
Number of square feet
Warehouse expense

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