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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
Â
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Wild Sun Airlines inc.
Divisional income Statements
For the Year ended December 31, 2016
passenger Division                           Cargo Division
Â
Revenues |
 |
$3,025,000 |
 |
$3,025,000 |
 |
Operating expenses |
 |
  2,450,000 |
 |
  2,736,000 |
 |
Income from operations before service department charges |
 |
 $  575,000 |
 |
 $ 289,000 |
 |
Less service department charges: |
 |
 |
 |
 |
 |
Training |
$125,000 |
 |
$125,000 |
 |
 |
Flight scheduling |
108,000 |
 |
108,000 |
 |
 |
Reservations |
  151,200 |
     384,200 |
  151,200 |
    384,200 |
 |
Income from operations |
 |
$ Â 190,800 |
 |
$Â Â (95,200) |
 |
Â
The service department charge rate for the service department costs was based on revenues. Because the revenues of the two divisions were the same, the service depart- ment charges to each division were also the same.
The following additional information is  available:
Â
passenger Division
Cargo
Division                     total
Number of personnel trained                                          350                              150                                       500
Number of flights                                                                       800                          1,200                                    2,000
Number of reservations requested                        20,000                                      0                                20,000
a.     Does the income from operations for the two divisions accurately measure performance? Explain.
b.    Correct the divisional income statements, using the activity bases provided in revising the service department charges.
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