Question

Divisional Income Statements

Answer 1

Answer and Explanation:

The Preparation of divisional income statements is following below:-

                                 Ruiz Industries Inc.

                               Divisional Income Statements

                    For the Year Ended November 30, 2018

                                     Commercial Division         Residential Division

Sales a                                  $479,140                         $292,280

Cost of goods sold b           $316,230                          $163,680

Gross profit c = (a - b)          $162,910                          $128,600

Administrative expenses d $57,500                           $58,460

Operating income              $105,410                          $70,140

(e = c - d)

Support department

allocations f                           $43,120                           $28,350

Segment Income                  $62,290                         $41,790

(g = e - f)

So, to reach at segment income we subtract the Support department allocations from operating income.