Divisional Income Statements with Support Department Allocations 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 $1,170,000 Purchasing Department 450,000 Other corporate administrative expenses 800,000 Total expense $2,420,000 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: Tech Services Purchasing Consumer Division 1,100 computers 4,000 purchase orders Commercial Division 700 8,000 Total 1,800 computers 12,000 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 $15,500,000 $33,250,000 Cost of goods sold 10,000,000 15,800,000 Operating expenses 3,000,000 1,750,000 Prepare the divisional income statements for the two divisions. Round your interim calculations to three decimal places, if required. Horton Technology Divisional Income Statements For the Year Ended December 31, 20Y7 Consumer Division Commercial Division $ $ $ $ Operating income before support department allocations $ $ Support department allocations: $ $ Total support department allocations $ $ $ $

Divisional Income Statements with Support Department Allocations 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 $1,170,000 Purchasing Department 450,000 Other corporate administrative expenses 800,000 Total expense $2,420,000 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: Tech Services Purchasing Consumer Division 1,100 computers 4,000 purchase orders Commercial Division 700 8,000 Total 1,800 computers 12,000 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 $15,500,000 $33,250,000 Cost of goods sold 10,000,000 15,800,000 Operating expenses 3,000,000 1,750,000 Prepare the divisional income statements for the two divisions. Round your interim calculations to three decimal places, if required. Horton Technology Divisional Income Statements For the Year Ended December 31, 20Y7 Consumer Division Commercial Division $ $ $ $ Operating income before support department allocations $ $ Support department allocations: $ $ Total support department allocations $ $ $ $

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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Divisional Income Statements with Support Department Allocations

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	$1,170,000
Purchasing Department	450,000
Other corporate administrative expenses	800,000
Total expense	$2,420,000

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:

	Tech Services	Purchasing
Consumer Division	1,100	computers	4,000	purchase orders
Commercial Division	700		8,000
Total	1,800	computers	12,000	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	$15,500,000		$33,250,000
Cost of goods sold	10,000,000		15,800,000
Operating expenses	3,000,000		1,750,000

Prepare the divisional income statements for the two divisions. Round your interim calculations to three decimal places, if required.

Horton Technology
Divisional Income Statements
For the Year Ended December 31, 20Y7
	Consumer Division	Commercial Division
	$	$

	$	$

Operating income before support department allocations	$	$
Support department allocations:
	$	$

Total support department allocations	$	$
	$	$

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