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Chrome File Edit View History Bookmarks People Window Help ? 4)) 13%H, sun 1:07 PM a E CengageNOWv2 I Online teaching and learning resource from Cengage Learning ? v2.cengagenow.com/ilrn/takeAssignment takeAssignmentMan.doPinvokerassignmentsAtakeAssignmentSessionLocator=assignment take&inprogress-false; 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: 2. EX23-03 3. EX.23-06.ALGO 4. EX.23-07 ALGO 5. EX.23-13.ALGO 6. EX.23-15 ALGO 7. EX.23-18 $690,000 407,500 472,000 $1,569,500 Tech Support Department Purchasing Department Other corporate administrative expenses Total corporate expense 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 Purchasing Tech Support 370 computers 230 8. EX.23-20 5,700 purchase orders 10,600 16,300 purchase orders Consumer Division 9. PR.23-01A BLANKSHEET 10. PR.23-02B.ALGO 11. PR.23-03B ALGO 12. PR.23-04B ALGO Commercial Division Total 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 $6,680,000 $6,136,200 Check My Work Previous Next Progress: 4/12 items Assignment Score: 0.0% Email Instructor Save and Exit Submit Assignment for Grading 29

Explanation / Answer

Firstly we need to allocate service department charges between both divisions which is shown as follows:-

Yozamba Technology

Divisional Income Statements

For the year ended December 31, 20Y7 (Amounts in $)

Service Department Charges Consumer Division Commercial Division Tech Support Department (in the ratio of computers) ($690,000*370/600) = $425,500 ($690,000*230/600) = $264,500 Purchasing Department (in the ratio of orders) ($407,500*5,700/16,300) = $142,500 ($407,500*10,600/16,300) = $265,000

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