Lilac Group is organized into two geographic divisions (Americas and Rest of the World, or ROW) and a corporate headquarters. Late last year, the Lilac CFO prepared financial operating plans (Budget) for the two divisions for the current year, shown as follows:

Americans ROW

Revenues $58500000 $71500000

Direct division cost $46200000 $51250000

Operating profit before allocation 12300000 20250000

Corporate overhead costs are expected to be 10.4 million in the current year. Of the 10.4 million, 6.5 million is fixed, and the remainder is variable with respect to revenue. Division managers are evaluated and compensated in part on division operating profit relative to the budget

Required:

1. Suppose corporate overhead is allocated to the two division based on relative revenue. What are the budgeted operating profit in each division for the current year after the corporate costs are allocated?
2. At the end of the current year actual corporate costs incurred were 11 million. Of the 11 million 6.6 was fixed. Actual results in the two divisions are as follows:

Americans ROW

Revenues $58500000 $87750000

Direct cost $46200000 $62550000

Operating profit before allocation $12300000 $25200000

What are the operating profit in each division for the current year after the corporate costs are allocated?