The centralized computer technology department of Lee Company has expenses of $2

Question

The centralized computer technology department of Lee Company has expenses of $264,000. The department has provided a total of 2,500 hours of service for the period. The Retail Division has used 1,125 hours of computer technology service during the period, and the Commercial Division has used 1,375 hours of computer technology service.

Use the data provided to determine the divisional income from operations for the Division and the Commercial Division. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

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Amount Descriptions

Retail Division Commercial Division Sales $945,000 $966,000 Cost of goods sold 504,000 559,300 Selling expenses 156,800 175,000

Explanation / Answer

Total Centralised expenses=$264,000

Allocated to Retail division =$264,000*1,125/2,500=$118,800

Allocated to Commercial Division =$264,000*1,375/2,500=$118,800

divisional income from operations Particulars Retail Division $ Commercial Division $ Sales        945,000        966,000 Less: Cost of goods sold        504,000 ,59,300 Selling expenses        156,800        175,000        660,800        734,300 Opearting income        284,200        231,700 Less: Centralised Expenses        118,800        145,200 Net Operating Income        165,400            86,500

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