Championship Sports Inc. operates two divisions, the Winter Sports Division and the Summer Sports Division. The following
Question:
Championship Sports Inc. operates two divisions, the Winter Sports Division and the Summer Sports Division. The following income and expense accounts have been obtained from the trial balance, after all adjustments, including for inventories, have been recorded and posted as of the end of the fiscal year, 31 December 20Y9:
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 Expenses—Winter Sports Division | 800.000 |
Administrative Expenses—Summer Sports Division | 1.450.000 |
Ad spend | 1.090.000 |
Transportation Expense | 192.000 |
Receivable Collection Expense | 68.000 |
Warehouse Expense | 1.800.000 |
The principles to be used in the distribution of expenses, together with other information, are as follows:
- Advertising expense at the headquarters allocated to the departments on the basis of usage: Winter Sports Department, $375,000; Summer Sports Division, $715,000.
- Transportation expense—$4.00 per bill of lading allocated to divisions: Winter Sports Division, 17,500 bills of lading; Summer Sports Division, 30,500 bill of lading.
- Accounts receivable collection expense—Winter Sports Division, 25,000 sales invoices filed at headquarters and allocated to departments at a rate of $1.00 per invoice; Summer Sports Division, 43,000 sales invoices.
- Warehouse expense—allocated to departments based on floor space used to store departmental products: Winter Sports Department, 60,000 square feet; Summer Sports Division, 90,000 square feet.
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. If necessary, round your intermediate calculations to two decimal places.
Championship Sports Inc. | ||
Segmental Income Statements | ||
For the Year Ended 31 December 20Y9 | ||
Winter Sports Department | Summer Sports Department | |
Sales | $ | $ |
cost of goods sold | ||
Gross profit | $ | $ |
Split selling and administrative expenses: | ||
Split selling expenses | $ | $ |
Department administrative expenses | ||
Total split selling and administrative expenses | $ | $ |
Operating income before support department allocations | $ | $ |
Support department allocations: | ||
Ad spend | $ | $ |
transportation expense | ||
receivable collection expense | ||
Warehouse expense | ||
Total support department allocations | $ | $ |
Operating income | $ | $ |
Provide supporting calculations for support department allocations. If necessary, round per unit, two decimal places, and final answers equal to the nearest dollar.
Championship Sports Inc. | |||
Support Department Allocations | |||
For the Year Ended 31 December 20Y9 | |||
Winter Sports Department | Summer Sports Department | Total | |
Ad spend | $ | $ | $ |
Carriage fee per bill of lading | $ | $ | |
Number of bills of lading | |||
transportation expense | $ | $ | $ |
Receivables collection rate | $ | $ | |
Number of sales invoices | |||
receivable collection expense | $ | $ | $ |
Warehouse rate per square meter | $ | $ | |
number of square meters | |||
Warehouse expense | $ | $ | $ |
Accounting
ISBN: 978-0324401844
22nd Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac