Ryan Snow Sports Company has two divisions, Wholesale and Retail, and two corpor
ID: 2454455 • 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:
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:
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:
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
Gross profit
Income from operations
Operating expenses
Revenues
Correct 6
Correct 7
Correct 8
Cost of goods sold
Gross profit
Income from operations
Tech support department
Correct 9
Correct 10
Correct 11
Gross profit
Loss from operations
Operating expenses
Revenues
Correct 12
Correct 13
Correct 14
Accounts payable department
Income from operations
Loss from operations
Operating expenses
Correct 15
Correct 16
Correct 17
Income from operations before service department charges
Correct 19
Correct 20
Less service department charges:
Cost of goods sold
Income from operations
Operating expenses
Tech Support department
Correct 22
Correct 23
Correct 24
Accounts Payable department
Gross profit
Income from operations
Operating expenses
Correct 25
Correct 26
Correct 27
Correct 28
Correct 29
Gross profit
Income from operations
Income from operations before service department charges
Loss from operations
Correct 30
Correct 31
Correct 32
Tech Support Department $ 761,600 Accounts Payable Department 332,000 Other corporate administrative expenses 470,000 Total corporate expense $1,563,600Explanation / Answer
Ryan Snow Sports Wholesale Div Retails Div Total No Of computers 420 260 680 Tech Support dept Expenses 470,400 291,200 761,600 No of chqs 5,800 10,800 16,600 Accounts Payable dept expenses 116,000 216,000 332,000 Ryan Snow Sports Divisional Income statement for the year ended Dec31.2014. Amt in $ Details Wholesale Div Retails Div Total Revenues 6,896,300 5,877,400 12,773,700 Cost Of Goods Sold 3,831,300 2,967,800 6,799,100 Gross Profit 3,065,000 2,909,600 5,974,600 Operating Expenses 1,352,700 1,469,200 2,821,900 Income from Operations before Service department charges 1,712,300 1,440,400 3,152,700 Less: Service Department Charges Tech Support department 470,400 291,200 761,600 Accounts Payable Department 116,000 216,000 332,000 Income From Opearations 1,125,900 933,200 2,059,100
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