Question

Divisional Income Statements with Service Department Charges

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, 20Y7, are as follows:

Tech Support Department	$1,432,000
Purchasing Department	422,500
Other corporate administrative expenses	797,000
Total corporate expense	$2,651,500

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:

	Tech Support		Purchasing
Consumer Division	490	computers	5,900	purchase orders
Commercial Division	310		11,000
Total	800	computers	16,900	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 follows:

	Consumer		Commercial
Revenues	$12,049,400		$9,617,000
Cost of goods sold	6,694,100		4,856,100
Operating expenses	2,363,500		2,404,000

Prepare the divisional income statements for the two divisions. Do not round your interim calculations.

Yozamba Technology
Divisional Income Statements
For the Year Ended December 31, 20Y7
		Consumer Division		Commercial Division
		$		$
		$		$
Income from operations before service department charges		$		$
Service department charges:
		$		$
Total service department charges		$		$
		$		$

Answer 1

Yozamba Technology - Divisional Income statements O For the year ended December 31, 2017 Consumer Division commercial Division Revenue I $12,049,400 & 9,617,000 cost of goods sold 66,694, 100) ($ 4,256,100) Gross Prolit 165,355,300 $4,860,900 Operating expenses $2,363,500) ($2,404,000) Income from operations before 32,991,800 $ 3356, 900 L-service department charges service department charges Tech support Department $ 8,14,100 $ 554,900 Purchasing Department $147,500 $ 275,000 Total service depas mert chasgue 1,024,600 $ 829,900 Income from operations 31,967,200 31525,000 Calculations for Tech support department and Purchasing department Tech support 1,432,000 department 1990 Consumer Division 690+1990 - $77,100 commercial Divisio 310* 90 =554.900 Purchasing Department 422500 - 25 6,900 5900+25 - 147,500 11000 25 245.000