Question

Stable Enterprises is organized into two geographic divisions (Asia and Europe) and a corporate headquarters. Late in year 7,Required A Required B Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the buRequired A Required B What are the operating profits in each division for year 8 after the corporate costs are allocated? (Do

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A. Asia Europe Total
Revenues $       50,600 $       64,400 $ 1,15,000
Direct costs $       25,300 $       38,640 $     63,940
Operating profit before allocations $       25,300 $       25,760 $     51,060
Corporate costs $       13,200 $       16,800 $     30,000
Operating profit $       12,100 $         8,960 $     21,060
Workings:
Asia Europe Total
(i) Revenues $       50,600 $       64,400 $ 1,15,000
(ii) = (i) / $117000 Percentage 44.00% 56.00% 100.00%
(ii) X $30000 Corporate costs $       13,200 $       16,800 $     30,000
B. Asia Europe Total
Revenues $       50,600 $       64,400 $ 1,15,000
Direct costs $       25,300 $       38,640 $     63,940
Operating profit before allocations $       25,300 $       25,760 $     51,060
Corporate costs $         8,360 $       10,640 $     19,000
Operating profit $       16,940 $       15,120 $     32,060
Workings:
Asia Europe Total
(i) Revenues $       50,600 $       64,400 $ 1,15,000
(ii) = (i) / $117000 Percentage 44.00% 56.00% 100.00%
(ii) X $19000 Corporate costs $         8,360 $       10,640 $     19,000
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