Ryan Snow Sports Company has two divisions, Wholesale and Retail, and two corpor
ID: 2454454 • Letter: R
Question
Ryan Snow Sports Company has two divisions, Wholesale and Retail, and two corporate service departments, Tech Support and Accounts Payable. The corporate expenses for the year ended December 31, 2014, are as follows: Tech Support Department $ 761,600 Accounts Payable Department 332,000 Other corporate administrative expenses 470,000 Total corporate expense $1,563,600 The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech 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 for each department. The usage of service by the two divisions is as follows: Tech Support Accounts Payable Wholesale Division 420 computers 5,800 checks Retail Division 260 10,800 Total 680 computers 16,600 checks The service department charges of the Tech 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: Wholesale Retail Revenues $6,896,300 $5,877,400 Cost of goods sold 3,831,300 2,967,800 Operating expenses 1,352,700 1,469,200 Hide Hint(s) Prepare the divisional income statements for the two divisions. Do not round your interim calculations. Ryan Snow Sports Company Divisional Income Statements For the Year Ended December 31, 2014 Wholesale Division Retail Division $ $ $ $ Income from operations before service department charges $ $ Less service department charges: $ $ $ $
Explanation / Answer
No of Division = 2 Wholesale & Retail
No of corporate service department = 2 Tech support & Accounts payable
Divisional Income Statement for year ended 2014:
Wholesale Division Retail Division
Total Revenue before Service Department charges $6896300 $5877400
Less : Cost of Goods Sold : $3831300 $2967800
Operating profit $3065000 $2909600
Less : Operating Expenses $1352700 $1469200
Net profit $1712300 $1440400
Note : tech support Department charges two division on the basis of No of computer uses by that particular division & Accounts payable division charges two division for their services on the basis of No of cheques issued to particular division. hence in the question operating expenses include that service charges as no rate is specified in the question only No of cheques & No of computer is given hence we assume that that opearating expenses of two division is inclusive of service charges charged by tow service department.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.