3. Profit center reporting Data for the North Divison and the South Divison of B

Question

3. Profit center reporting

Data for the North Divison and the South Divison of Bateman Company for the year ending December 31,2013 and data from the Payroll Accounting Department are shown.

Payroll department costs are allocated based on the number of checks prepared.

A. Please complete the following:

Complete the divisional income statement for Bateman Company for the year ending December 31,2013.

Bateman Company

Divisional Income Statements

For the Year Ending December 31,2013

Choose from the following for the blank first column:

Income from operations before service department charges

Gross profit

Income from operations

Service department charges

North Divison South Division Sales $705,000 $780,000 Cost of goods sold 385,000 355,000 Selling expenses 169,000 187,500

Explanation / Answer

Statement showing allocation Particulars North Div South Div Total No of Payroll Checks             8,200.00        9,200.00          17,400.00 Payroll accounting expenses        139,200.00 Expense per Payroll Check(139200/17400)                     8.00 Allocation of Exp@8          65,600.00      73,600.00 Statement showing income Particulars North Div South Div Total Sales        705,000.00    780,000.00    1,485,000.00 Cost of goods sold        385,000.00    355,000.00        740,000.00 Gross Margin        320,000.00    425,000.00        745,000.00 Selling expenses        169,000.00    187,500.00        356,500.00 Payroll Expenses          65,600.00      73,600.00        139,200.00 Income from operations          85,400.00    163,900.00        249,300.00

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