= Homework: Chapter 15 Cost Allocation Question 8, P15-34 (similar to) Part 2 of 6 HW Score: 16.14%, 1.94 of 12 points Points: 0.05 of 2 Save the four divisions for the most recent Diana Brison, controller of the Wonderful Snacks, is preparing a presentation to senior executives about the performance of its four divisions. Summary data related year are as follows: (Click the icon to view the summary data) (Click the icon to view more information.) The components of corporate costs for the most recent year and Brison's suggested cost pools and allocation bases are as follows: (Click the icon to view the suggested cost pools and allocation bases.) Read the requirements. Requirement 1. Select two reasons why Wonderful Snacks should allocate corporate costs each division To provide information for economic decisions. B. To determine the likelihood of customer retention. C. Income measurement for external parties. D. To quantify the potential for sales growth. Requirement 2. Calculate the operating income of each division when all corporate costs are allocated based on revenues of each division. (Round allocation proportions to one place (decimal values to three places, XXX). Enter operating losses with minus signs or parentheses.) Nuts Crackers Cookies Candy 566,100 $ $ 632,700 $ (1,000) $ 133,200 Operating income Allocated corporate costs Division operating income (loss) - Data table A B D E F 1 DIVISIONS 2 Candy Nuts Crackers Cookies Total 3 Revenue $ 1,221,000 $ 1,147,000 $ 740,000 $ 592,000 $ 3,700,000 4 Operating Costs 654,900 514,300 741,000 458,800 2,369,000 5 Operating Income $ 566,100 $ 632,700 $ (1,000) $ 133,200 $ 1,331,000 6 lidentifiable assets $ 2,320,000 $ 3,680,000 $ 1,520,000 $ 480,000 $ 8,000,000 7 Number of employees 5,600 9,400 4,800 200 20,000 Print Done Data table A B D Suggested Cost Pool 11 Corporate Cost Category Amount Suggested Allocation Base 12 Interest on debt $ 650,000 Cost Pool 1 Identifiable assets 13 Corporate salaries 140,000 Cost Pool 2 14 Accounting and control 100,000 Cost Pool 2 Division revenues 15 General marketing 220,000 Cost Pool 2 16 Public affairs 135,000 Cost Pool 3 Positive operating income* 17 Personnel and payroll 105,000 Cost Pool 4 Number of employees 18 Total $ 1,350,000 * Brison proposes that this cost be allocated using operating income (if positive) of divisions, with 19 only divisions with positive operating income included in the allocation base. Print Done More info Under the existing accounting system, costs incurred at corporate headquarters are collected in a single cost pool ($1.35 million in the most recent year) and allocated to each division on the basis of its actual revenues. The top managers in each division share in a division-income bonus pool. Division income is defined as operating income less allocated corporate costs. Brison has analyzed the components of corporate costs and proposes that corporate costs be collected in four cost pools. Print Done