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: Line Item Description Amount Tech Services Department $734,500 Purchasing Department 447,000 Other corporate administrative expenses 508,000 Total expense $1,689,500 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: Line Item Description Tech Services Purchasing Consumer Division 400 computers 5,200 purchase orders Commercial Division 250 9,700 Total 650 computers 14,900 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: Line Item Description Consumer Commercial Revenues $7,150,500 $6,645,800 Cost of goods sold 3,972,500 3,355,800 Operating expenses 1,402,600 1,661,300 Prepare the divisional income statements for the two divisions. Do not round your interim calculations. Horton TechnologyDivisional Income StatementsFor the Year Ended December 31, 20Y7 Line Item Description Consumer Division Commercial Division $Revenues $Revenues Cost of goods sold Cost of goods sold $Gross profit $Gross profit Operating expenses Operating expenses Operating income before support department allocations $Operating income before support department allocations $Operating income before support department allocations Support department allocations: $Tech service department $Tech service department Purchasing department Purchasing department Total support department allocations $Total support department allocations $Total support department allocations $Operating income $Operating income

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: Line Item Description Amount Tech Services Department $734,500 Purchasing Department 447,000 Other corporate administrative expenses 508,000 Total expense $1,689,500 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: Line Item Description Tech Services Purchasing Consumer Division 400 computers 5,200 purchase orders Commercial Division 250 9,700 Total 650 computers 14,900 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: Line Item Description Consumer Commercial Revenues $7,150,500 $6,645,800 Cost of goods sold 3,972,500 3,355,800 Operating expenses 1,402,600 1,661,300 Prepare the divisional income statements for the two divisions. Do not round your interim calculations. Horton TechnologyDivisional Income StatementsFor the Year Ended December 31, 20Y7 Line Item Description Consumer Division Commercial Division $Revenues $Revenues Cost of goods sold Cost of goods sold $Gross profit $Gross profit Operating expenses Operating expenses Operating income before support department allocations $Operating income before support department allocations $Operating income before support department allocations Support department allocations: $Tech service department $Tech service department Purchasing department Purchasing department Total support department allocations $Total support department allocations $Total support department allocations $Operating income $Operating income

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:

Line Item Description	Amount
Tech Services Department	$734,500
Purchasing Department	447,000
Other corporate administrative expenses	508,000
Total expense	$1,689,500

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:

Line Item Description	Tech Services	Purchasing
Consumer Division	400 computers	5,200 purchase orders
Commercial Division	250	9,700
Total	650 computers	14,900 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:

Line Item Description	Consumer	Commercial
Revenues	$7,150,500	$6,645,800
Cost of goods sold	3,972,500	3,355,800
Operating expenses	1,402,600	1,661,300

Prepare the divisional income statements for the two divisions. Do not round your interim calculations.

Horton TechnologyDivisional Income StatementsFor the Year Ended December 31, 20Y7

Line Item Description	Consumer Division	Commercial Division
	$Revenues	$Revenues
	Cost of goods sold	Cost of goods sold
	$Gross profit	$Gross profit
	Operating expenses	Operating expenses
Operating income before support department allocations	$Operating income before support department allocations	$Operating income before support department allocations
Support department allocations:
	$Tech service department	$Tech service department
	Purchasing department	Purchasing department
Total support department allocations	$Total support department allocations	$Total support department allocations
	$Operating income	$Operating income

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