Question

Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing The corporate expenses for the year ended December 31, 2016, are as follows: Tech Support Department $ 459,200 Purchasing Department 900 Other corporate administrative expenses 545,000 Total corporate expense $1,101,100 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 Purchasing Department charges divisions for services, based on the number of purchase orders for each department. The usage of service by the two divisions is as follows: Support Purchasing Consumer Division 380 computers 1.900 purchase orders Commercial Division 180 3.800 560 computers 5.700 purchase orders The service department charges of the Tech Support Department and the Purchasing 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 foliows

Answer 1

YOZAMBA TECHNOLOGY
Divisional Income Statements
For the Year Ended December 31, 2016
	Consumer Division	Commercial Division
Revenues	7420000	6192000
Cost of goods sold	4133000	3115000
Gross profit	3287000	3077000
Operating expenses	1456000	1542000
Income from operations before service department charges	1831000	1535000
Service department charges:
Tech Support Department	311600	147600
Purchasing Department	32300	64600
Total service department charges	343900	212200
Income from operations	1487100	1322800
Workings:
	Consumer Division	Commercial Division
Service department charges:
Tech Support Department	=459200/560*380	=459200/560*180
Purchasing Department	=96900/5700*1900	=96900/5700*3800