Question

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:

Tech Support Department	$475,600
Purchasing Department	66,000
Other corporate administrative expenses	580,000
Total corporate expense	$1,121,600

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:

	Tech Support	Purchasing
Consumer Division	320 computers	1,980 purchase orders
Commercial Division	260	3,520
Total	580 computers	5,500 purchase orders

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
Revenues	$7,440,000	$6,182,000
Cost of goods sold	4,106,000	3,130,000
Operating expenses	1,459,000	1,543,500

Required:

Prepare the divisional income statements for the two divisions. Refer to the list of Label and Amount Descriptions for the exact wording of the answer choices for text entries. A colon (:) will fill in where needed.

Label and Amount Descriptions

Label
Service department charges
Amount Descriptions
Advertising Department
Cost of goods sold
Gross profit
Income from operations
Income from operations before service department charges
Operating expenses
Purchasing Department
Revenues
Selling expenses
Tech Support Department
Total service department charges

Divisional Income Statements

Prepare the divisional income statements for the two divisions. Refer to the list of Label and Amount Descriptions for the exact wording of the answer choices for text entries. A colon (:) will fill in where needed.

Yozamba Technology

Divisional Income Statements

For the Year Ended December 31, 20Y7

1		Consumer Division	Commercial Division
2
3
4
5
6
7
8
9
10
11

Answer 1