Answer:
Retail Division = $480,000
Commercial Division = $125,000
Explanation:
<u>Divisional income from operations for the Retail Division and the Commercial Division</u>
Retail Division Commercial Division
Sales $2,150,000 $1,200,000
Cost of goods sold ($1,300,000) ($800,000)
Controllable Contribution $850,000 $400,000
Less Expenses
Selling expenses ($150,000) ($175,000)
Allocated Central Costs ($220,000) ($100,000)
Net Income before tax $480,000 $125,000
Calculations :
Allocation of Central Costs :
Retail Division (2,750/ 4,000 × $320,000) = $220,000
Retail Division (1,250/ 4,000 × $320,000) = $100,000
