The centralized employee travel department of Croce Company has expenses of $724

ID: 2532833 • Letter: T

Question

The centralized employee travel department of Croce Company has expenses of $724,000. The department has serviced a total of 5,000 travel reservations for the period. The South Division has made 2,850 reservations during the period, and the West Division has made 2,150 reservations. South Division West Division Sales $2,600,000 $2,420,000 Cost of goods sold 1,352,000 1,379,400 Selling expenses 520,000 484,000 Use the data provided to determine the divisional income from operations for the South and West divisions: Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Explanation / Answer

Solution:

Calculation of Divisional Income

Solution:

Calculation of Divisional Income

South Division

West Division

Sales

$2,600,000

$2,420,000

Cost of Goods Sold

$1,352,000

$1,379,400

Gross Margin

$1,248,000

$1,040,600

Less: Selling Expenses

$520,000

$484,000

Less: Service Department Charges (Refer Note 1)

$412,680

$311,320

Operating Income

$315,320

$245,280

Note --- In case the wording and format is not correct, pls provide us the correct format to get correct solution.

Note 1 --- Service Department Charges

Total Service Dept Charges = $724,000

Total Travel Reservation served = 5,000

Per Travel Reservation charges = $724,000 / 5000 = $144.80

Allocated Service Department Charges to South Division = Reservation served by south division 2,850 * Per Travel Reservation Charges $144.80

= $412,680

Allocated Service Department Charges to West Division = Reservation served by West division 2,150 * $144.80

= $311,320

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you