Entertainment Electronics Company has two divisions, Video and Audio, and two corporate service departments, Computer Support and Accounts Payable. The corporate expenses for the year ended December 31, 2006, are as follows:
Computer Support Department ......... $420,000
Accounts Payable Department ......... 165,000
Other corporate administrative expenses ..... 245,000
Total corporate expense ............ $830,000
The other corporate administrative expenses include officers€™ salaries and other expenses required by the corporation. The Computer Support Department charges the divisions for services rendered based on the number of computers in the department, and the Accounts Payable Department charges divisions for services, based on the number of checks issued. The usage of service by the two divisions is as follows:

The service department charges of the Computer Support Department and the Accounts Payable 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:

Prepare the divisional income statements for the twodivisions.

Transcribed Image Text:

Video Diviion 180 computers Audio Division 120 300 computers 4,200 checks 7,800 12,000 checks Total Video Audio Revenues Cost of goods sold Operating expenses $4,000,000 3,400,000 1,600,000 700,000 2,100,000 750,000