Question

Divisional Income Statements The following data were summarized from the accounting records for Ruiz Industries Inc. for the year ended November 30, 20Y8:

Cost of goods sold: Support department allocations:
Commercial Division $447,070 Commercial Division $60,960
Residential Division 227,600 Residential Division 39,420

Administrative expenses: Sales:
Commercial Division $81,290 Commercial Division $677,380
Residential Division 406,430 Residential Division 81,290

Prepare divisional income statements for Ruiz Industries Inc.

Answer 1

Commercial division has net income of $88,060

Residential division has net income of $58,120

Company wide net income is $146,180

Step-by-step explanation:

Ruiz Industries divisional income statement as at 30 November 20Y8

commercial division residential division

Sales $677,380 $406,430

costs of goods sold ($447,070) ($227,600)

Gross profit $230,310 $178,830

Administrative expenses ($81,290) ($81,290)

operating income $149,020 $97,540

Allocated costs ($60,960) ($39,420)

Division net income $88,060 $58,120

Even though the allocated costs were not incurred directly by the divisions ,but they are still part of the entire business expenses that must be recovered