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 $9,200,000 Sales—Summer Sports Division 16,500,000 Cost of Goods Sold—Winter Sports Division 4,400,000 Cost of Goods Sold—Summer Sports Division 9,000,000 Sales Expense—Winter Sports Division 740,000 Sales Expense—Summer Sports Division 1,300,000 Administrative Expense—Winter Sports Division 740,000 Administrative Expense—Summer Sports Division 1,760,000 Advertising Expense 1,115,000 Transportation Expense 285,000 Accounts Receivable Collection Expense 70,000 Warehouse Expense 987,000 The bases to be used in allocating expenses, together with other information, are as follows: Advertising expense—incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $372,000; Summer Sports Division, $743,000. Transportation expense—charged back to divisions at a charge rate of $6.00 per bill of lading: Winter Sports Division, 17,500 bills of lading; Summer Sports Division, 30,000 bills of lading. Accounts receivable collection expense—incurred at headquarters, charged back to divisions at a charge rate of $1.00 per invoice: Winter Sports Division, 26,000 sales invoices; Summer Sports Division, 44,000 sales invoices. Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 50,000 square feet; Summer Sports Division, 91,000 square feet. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.     Open spreadsheet   Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your intermediate calculations. 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 computations 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   $   $   $

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 $9,200,000
Sales—Summer Sports Division 16,500,000
Cost of Goods Sold—Winter Sports Division 4,400,000
Cost of Goods Sold—Summer Sports Division 9,000,000
Sales Expense—Winter Sports Division 740,000
Sales Expense—Summer Sports Division 1,300,000
Administrative Expense—Winter Sports Division 740,000
Administrative Expense—Summer Sports Division 1,760,000
Advertising Expense 1,115,000
Transportation Expense 285,000
Accounts Receivable Collection Expense 70,000
Warehouse Expense 987,000

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

  1. Advertising expense—incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $372,000; Summer Sports Division, $743,000.
  2. Transportation expense—charged back to divisions at a charge rate of $6.00 per bill of lading: Winter Sports Division, 17,500 bills of lading; Summer Sports Division, 30,000 bills of lading.
  3. Accounts receivable collection expense—incurred at headquarters, charged back to divisions at a charge rate of $1.00 per invoice: Winter Sports Division, 26,000 sales invoices; Summer Sports Division, 44,000 sales invoices.
  4. Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 50,000 square feet; Summer Sports Division, 91,000 square feet.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

 

 
Open spreadsheet

 

Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your intermediate calculations.

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 computations 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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