Big Bear Athletic Equipment Co. operates two division - the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of June 30, 2008, the end of the current fiscal year, after all adjustments, including those for inventories, were recorded and posted:
Sales - Winter Sports (WS) Division...$950,000
Sales - Summer Sports (SS) Division...$1,437,500
COGS - (WS) Division...$512,500
COGS - (SS) Division...$687,500
Sales Exp - (WS) Division...$150,000
Sales Exp - (SS) Division...$205,000
Admini Exp - (WS) Division...$97,000
Admini Exp - (SS) Division...$128,000
Advertising Exp...$64,500
Transportation Exp...$100,700
A/R Collection Exp...$58,100
Warehouse Exp...$120,000
The bases to be used in allocating expenses, together with other essential information, are as follows:
a. Advertising Exp - incurred at headquarters, charged back todivisions on the basis of usage: (WS) Division, $28,000; (SS)Division, $36,500.
b. Transportation Exp - charged back to divisions at a transfer price of $7.60 per bill of lading: (WS) Division, 6,000 bills of lading; (SS) Division, 7,250 bills of lading.
c. A/R Collection Exp - incurred at headquarters, charged back to divisions at a transfer price of $5.60 per invoice; (WS) Division,4,500 sales invoices; (SS) Division, 5,875 sales invoices.
d. Warehouse Exp - charged back to divisions on the basis of floor space used in storing division products: (WS) Division, 25,000 sqft; (SS) Division, 12,500 sq ft.
Prepare a division income statement with two column headings: (WS)Division and (SS) Division. Provide supporting schedules for determining service department charges.