The service department charge rate for the service department costs was based on
ID: 2454457 • Letter: T
Question
The service department charge rate for the service department costs was based on revenues. Since the revenues of the two divisions were the same, the service department charges to each division were also the same.
Correct the divisional income statements, using the activity bases provided above in revising the service department charges. If an amount box does not require an entry, leave it blank, or enter zero "0". Round your interim calculations to two decimal places, if required.
Wild Sun Airlines Inc.
Divisional Income Statements
For the Year Ended December 31, 2014
Passenger Division
Cargo Division
Gross profit
Operating expenses
Revenues
Training
Correct 6
Correct 7
Correct 8
Flight scheduling
Income from operations
Operating expenses
Reservations
Correct 9
Correct 10
Correct 11
Income from operations before service department charges
Correct 13
Correct 14
Less service department charges:
Income from operations
Operating expenses
Revenues
Training
Correct 16
Correct 17
Correct 18
Cost of goods sold
Flight scheduling
Income from operations
Operating expenses
Correct 19
Correct 20
Correct 21
Loss from operations
Operating expenses
Reservations
Revenues
Correct 22
Correct 23
Correct 24
Correct 25
Correct 26
Gross profit
Income from operations
Income from operations before service department charges
Loss from operations
Correct 27
Correct 28
Correct 29
HideHint(s)
Correct the divisional income statements, using the activity bases provided above in revising the service department charges. If an amount box does not require an entry, leave it blank, or enter zero "0". Round your interim calculations to two decimal places, if required.
Wild Sun Airlines Inc.
Divisional Income Statements
For the Year Ended December 31, 2014
Passenger Division
Cargo Division
Gross profit
Operating expenses
Revenues
Training
Correct 6
$Correct 7
$Correct 8
Flight scheduling
Income from operations
Operating expenses
Reservations
Correct 9
Correct 10
Correct 11
Income from operations before service department charges
$Correct 13
$Correct 14
Less service department charges:
Income from operations
Operating expenses
Revenues
Training
Correct 16
$Correct 17
$Correct 18
Cost of goods sold
Flight scheduling
Income from operations
Operating expenses
Correct 19
Correct 20
Correct 21
Loss from operations
Operating expenses
Reservations
Revenues
Correct 22
Correct 23
Correct 24
Correct 25
Correct 26
Gross profit
Income from operations
Income from operations before service department charges
Loss from operations
Correct 27
$Correct 28
$Correct 29
Explanation / Answer
Wild Sun Airlines Inc Divisional Income Statement for the Year Ended 31st December 2014 Passenger department Cargo department Revenue 3025000 3025000 operating expenses 2450000 2736000 Income from operation before service department charges 575000 289000 service department charges Training 175000 75000 flight 86400 129600 Reservation 302400 Income from operation 1311200 1613600
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