Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, revenues and costs are as follows: Casino Hotel Revenues $ 32,000,000 $ 22,000,000 Costs 18,000,000 16,000,000 The casino and the hotel have a joint marketing arrangement by which the hotel gives coupons redeemable at casino slot machines and the casino gives discount coupons good for stays at the hotel. The value of the coupons for the slot machines redeemed during the past year totaled $4,800,000. The discount coupons redeemed at the hotel totaled $2,000,000. As of the end of the year, all coupons for the current year expired. Required: What are the operating profits for each division considering the effects of the costs arising from the joint marketing agreement? (Enter your answers in thousands.)
Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, revenues and costs are as follows: Casino Hotel Revenues $ 32,000,000 $ 22,000,000 Costs 18,000,000 16,000,000 The casino and the hotel have a joint marketing arrangement by which the hotel gives coupons redeemable at casino slot machines and the casino gives discount coupons good for stays at the hotel. The value of the coupons for the slot machines redeemed during the past year totaled $4,800,000. The discount coupons redeemed at the hotel totaled $2,000,000. As of the end of the year, all coupons for the current year expired. Required: What are the operating profits for each division considering the effects of the costs arising from the joint marketing agreement? (Enter your answers in thousands.)
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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Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, revenues and costs are as follows:
| Casino | Hotel | |||||
| Revenues | $ | 32,000,000 | $ | 22,000,000 | ||
| Costs | 18,000,000 | 16,000,000 | ||||
The casino and the hotel have a joint marketing arrangement by which the hotel gives coupons redeemable at casino slot machines and the casino gives discount coupons good for stays at the hotel. The value of the coupons for the slot machines redeemed during the past year totaled $4,800,000. The discount coupons redeemed at the hotel totaled $2,000,000. As of the end of the year, all coupons for the current year expired.
Required:
What are the operating profits for each division considering the effects of the costs arising from the joint marketing agreement? (Enter your answers in thousands.)
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