Answer:
Retail Division $480,000
Commercial Division $30,000
Explanation:
To measure divisional income consider only those items attributable to a particular division.
Retail Division
Sales 2,150,000
<em>Less</em> Cost of Sales (1,300,000)
Controllable Contribution 850,000
<em>Less</em> Controllable Fixed Cost :
Selling expenses (150,000)
Allocated Central Cost (2,750/4,000×$320,000) (220,000)
Divisional Profit Contribution 480,000
Commercial Division
Sales 1,200,000
<em>Less</em> Cost of Sales (800,000)
Controllable Contribution 400,000
<em>Less</em> Controllable Fixed Cost :
Selling expenses (150,000)
Allocated Central Cost (1,250/4,000×$320,000) (220,000)
Divisional Profit Contribution 30,000
