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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
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Phoniex University
Oct-2001 - Nov-2016
Divisional income statements with service department charges
chas 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:
Â
Tech Support Department |
$Â Â 516,000 |
Purchasing Department |
89,600 |
Other corporate administrative  expenses |
   560,000 |
Total corporate expense |
$1,165,600 |
The other corporate administrative expenses include officers’ salaries and other ex- penses 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:
Â
Â
 |
tech Support |
purchasing |
Consumer Division Commercial Division Total |
375 computers 225 600 computers |
1,960 purchase orders   3,640 5,600 purchase orders |
Â
The service department charges of the Tech Support Department and the Purchasing Department are considered controllable by the divisions. Corporate administrative ex- penses are not considered controllable by the divisions. The revenues, cost of goods sold, and operating expenses for the two divisions are as follows:
Â
 |
Consumer |
Commercial |
Revenues |
$7,430,000 |
$6,184,000 |
Cost of goods sold |
4,123,000 |
3,125,000 |
Operating expenses |
1,465,000 |
1,546,000 |
Prepare the divisional income statements for the two divisions.
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