Problem 15-49 (Algo) Segment Reporting (LO 15-5)Midwest Entertainment has four operating divisions: Bus Charters, Lodging, Concerts, and Ticket Services. Each division is a separatesegment for financial reporting purposes. Revenues and costs related to outside transactions were as follows for the past year (dollarsin thousands).BUSCharters$11,7007,950TicketRevenuesCostsLodging Concerts Services$4,5203,360$5,4003,550$1,6001,500Bus Charters Division participates in a frequent guest program with Lodging Division. During the past year, Bus Charters reported thatit traded lodging award coupons for travel that had a retail value of $1.3 million, assuming that the travel was redeemed at full fares.Concerts Division offered 20 percent discounts to Midwest's bus passengers and lodging guests. These discounts to bus passengerswere estimated to have a retail value of $360,000. Midwest's lodging guests redeemed $130,000 in concert discount coupons.Midwest's hotels also provided rooms for Bus Charters's employees (drivers and guides). The value of the rooms for the year was$660,000.Ticket Services Division sold chartered tours for Bus Charters valued at $200,000 for the year. This service for intracompany lodgingwas valued at $110,000. It also sold concert tickets for Concerts; tickets for intracompany concert admission were valued at $54.000.While preparing all of these data for financial statement presentation, Lodging Division's controller stated that the value of the buscoupons should be based on their differential and opportunity costs, not on the full fare. This argument was supported because travelcoupons are usually allocated to seats that would otherwise be empty or that are restricted similar to those on discount tickets. If thedifferential and opportunity costs were used for this transfer price, the value would be $250,000 instead of $1.3 million. Bus Charters'scontroller mnade a similar argument concerning the concert discount coupons. If the differential cost basis were used for the concertcoupons, the transfer price would be $54,000 instead of the $360,000. Midwest reports assets in each division as follows (dollars in thousands).Bus ChartersLodgingConcertsTicket Services$48,50018,95015,6503,250Required:a. Using the retaill values for transfer pricing for segment reporting purposes, what are the operating profits for each Midwest division?b. What are the operating profits for each Midwest division using the differential cost basis for pricing transfers?c-1. Rank each division by ROI using the transfer pricing methods in requirement (a).c-2. Rank each division by ROI using the transfer pricing methods in requirement (b).Complete this questlon by entering your answers in the tabs below.Req AReq BReq C1Req C2Using the retail values for transfer pricing for segment reporting purposes, what are the operating profits for each Midwestdivision? (Enter your answers in thousands of dollars.)BusChartersTicketServicesLodgingConcertsTotal revenuesTotal costsOperating profits

ROI=Operating profitsAssets×100

Midwest reports assets in each divisloh as $48,500 18, 950 15, 650 3, 250 Bus Charters Lodging Concerts Ticket services Required: a. Using the retail values for transfer pricing for segment reporting purposes, what are the operating profits for each Midwest division b. What are the operating profits for each Midwest division using the differential cost basis for pricing transfers? c-1. Rank each division by ROI using the transfer pricing methods in requirement (a). c-2. Rank each division by ROI using the transfer pricing methods in requirement (b). Complete this question by entering your answers in the tabs below.

Midwest reports assets in each divisloh as $48,500 18, 950 15, 650 3, 250 Bus Charters Lodging Concerts Ticket services Required: a. Using the retail values for transfer pricing for segment reporting purposes, what are the operating profits for each Midwest division b. What are the operating profits for each Midwest division using the differential cost basis for pricing transfers? c-1. Rank each division by ROI using the transfer pricing methods in requirement (a). c-2. Rank each division by ROI using the transfer pricing methods in requirement (b). Complete this question by entering your answers in the tabs below.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.9E: Profit center responsibility reporting On-Demand Sports Co. operates two divisions—the Action Sports...

See similar textbooks

Similar questions

Profit center responsibility reporting On-Demand Sports Co. operates two divisions—the Action Sports Division and the Team Sports Division. The following income and expense accounts were provided as of November 30. 20Y1, the end of the current fiscal year, after all adjustments, including those for inventories, were recorded The bases to be used in allocating expenses, together with other essential information, are as follows a.Advertising expense—incurred al headquarters, charged back to divisions on the basis of usage: Action Sports Division. $1,200,000; Team Sports Division, $1,800,000. b. Transportation expense—charged hack lo divisions at a charge rale of $18.50 per bill of lading: Action Sports Division, 14.000 bills of lading; Team Sports Division. 21.400 bills of lading. C. Accounts receivable collection expense—incurred al headquarters, charged back to divisions at a charge rate of $9-00 per invoice: Action Sports Division. 32.000 sales invoices; Team Sports Division, 12.500 sales invoices. d. Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Action Sports Division. 120.000 square feet; Team Sports Division. 80.000 square feet. Prepare divisional income statements with two column headings: Action Sports Division and Team Sports Division. Provide supporting schedules for determining service department charges.
21. The following information pertains to the Chicken Wings Company and its divisions for the year ended December 31, 2020: • Sales to unaffiliated customers- P10,000,000 • Inter-segment sales of products similar to those sold to unaffiliated customers- P2,000,000 • Interest expense- P60,000 White has a reportable segment if that segment’s revenue is
An entity and its divisions reported the following for the current year: Sales to unaffiliated customers 40,000,000 Intersegment sales of product similar to those sold to unaffiliated customers 12,000,000 Interest earned on loans to other operating segments 1,000,000 The entity and all of its divisions are engaged solely in manufacturing operations. To qualify as reportable segment, the segment revenue should at least be what amount? A. 5,300,000 B. 4,100,000 C. 5,200,000 D. 4,000,000
Corrections to Service Department Charges for a Service Company Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: Wild Sun Airlines Inc.Divisional Income StatementsFor the Year Ended December 31, 20Y9 Passenger Division Cargo Division Revenues $3,025,000 $3,025,000 Operating expenses 2,450,000 2,736,000 Income from operations beforeservice department charges $575,000 $289,000 Less service department charges: Training $125,000 $125,000 Flight scheduling 108,000 108,000 Reservations 151,200 384,200 151,200 384,200 Income from operations $190,800 $(95,200) The service department charge rate for the service department costs was based on revenues. Because the revenues of the two divisions were the same, the service department charges to each division were also the same. The following additional…
Profit Center Responsibility Reporting XSport Sporting Goods Co. 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 $34,650,000 Sales—Summer Sports Division 38,280,000 Cost of Goods Sold—Winter Sports Division 20,790,000 Cost of Goods Sold—Summer Sports Division 22,110,000 Sales Expense—Winter Sports Division 5,940,000 Sales Expense—Summer Sports Division 5,280,000 Administrative Expense—Winter Sports Division 3,465,000 Administrative Expense—Summer Sports Division 3,399,000 Advertising Expense 946,000 Transportation Expense 476,800 Accounts Receivable Collection Expense 228,800 Warehouse Expense 3,300,000 The bases to be used in allocating expenses, together with other essential…
Vernon transport company divides its operations into four divisions. A recent statement for its West Division folows Vernon Transport Comapny Wesy division Income Statement for year 3 Revenue $670,000 Salaries for drivers (520,000) Fuel expenses (67,000) Insurance (87,000) Division-level facility- sustaining costs (57,000) Companywide facility-sustaining costs (147,000) Net loss $208,000 Required a) By how much would cormpanywide income increase or decrease if West Division is estimated? Should West Division be eliminated? b) assume that West Division is able to increase its revenue to $760,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segemnt were eliminated. Should West Division be eliminated if revenue were $760,000? c) What is the mininum amount of revenue required to Jusify continuing the operation of West Divison? Complete this question by entering your answer in the table below. Income Would…
Profit Center Responsibility Reporting XSport Sporting Goods Co. 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 $26,775,000 Sales—Summer Sports Division 29,580,000 Cost of Goods Sold—Winter Sports Division 16,065,000 Cost of Goods Sold—Summer Sports Division 17,085,000 Sales Expense—Winter Sports Division 4,590,000 Sales Expense—Summer Sports Division 4,080,000 Administrative Expense—Winter Sports Division 2,677,500 Administrative Expense—Summer Sports Division 2,626,500 Advertising Expense 927,000 Transportation Expense 408,800 Accounts Receivable Collection Expense 224,000 Warehouse Expense 2,550,000 The bases to be used in allocating expenses, together with other essential…
Profit Center Responsibility Reporting 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…
Profit Center Responsibility Reporting XSport Sporting Goods Co. 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 $29,295,000 Sales—Summer Sports Division 32,364,000 Cost of Goods Sold—Winter Sports Division 17,577,000 Cost of Goods Sold—Summer Sports Division 18,693,000 Sales Expense—Winter Sports Division 5,022,000 Sales Expense—Summer Sports Division 4,464,000 Administrative Expense—Winter Sports Division 2,929,500 Administrative Expense—Summer Sports Division 2,873,700 Advertising Expense 1,012,000 Transportation Expense 435,000 Accounts Receivable Collection Expense 250,200 Warehouse Expense 2,790,000 The bases to be used in allocating expenses, together with other essential…
Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A B C Sales $ 330,000 $ 480,000 $ 500,000 Cost of goods sold (242,000 ) (184,000 ) (190,000 ) Sales commissions (30,000 ) (44,000 ) (44,000 ) Contribution margin 58,000 252,000 266,000 General fixed operating expenses (allocation of president’s salary) (92,000 ) (92,000 ) (92,000 ) Advertising expense (specific to individual divisions) (6,000 ) (20,000 ) 0 Net income (loss) $ (40,000 ) $ 140,000 $ 174,000 Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising…
Question Content Area Profit center responsibility reporting 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: Line Item Description Amount Sales—Winter Sports Division $9,600,000 Sales—Summer Sports Division 15,000,000 Cost of Goods Sold—Winter Sports Division 5,500,000 Cost of Goods Sold—Summer Sports Division 9,500,000 Sales Expense—Winter Sports Division 780,000 Sales Expense—Summer Sports Division 1,000,000 Administrative Expense—Winter Sports Division 700,000 Administrative Expense—Summer Sports Division 1,440,000 Advertising Expense 1,099,000 Transportation Expense 150,000 Accounts Receivable Collection Expense 67,000 Warehouse Expense 966,000 The bases to be used in allocating…
Profit Center Responsibility Reporting Glades Sporting Goods Co. 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, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales—Winter Sports Division $12,600,000 Sales—Summer Sports Division 16,300,000 Cost of Goods Sold—Winter Sports Division 7,560,000 Cost of Goods Sold—Summer Sports Division 9,454,000 Sales Expense—Winter Sports Division 2,016,000 Sales Expense—Summer Sports Division 2,282,000 Administrative Expense—Winter Sports Division 1,260,000 Administrative Expense—Summer Sports Division 1,450,700 Advertising Expense 578,000 Transportation Expense 265,660 Accounts Receivable Collection Expense 174,000 Warehouse Expense 1,540,000 The bases to be used in allocating expenses, together with other essential…