Question

Arlington Clothing, Inc., shows the following information for its two divisions for year 1: Lake Region Coastal Region Sales revenue $ 4,200,000 $ 13,110,000 Cost of sales 2,711,300 6,555,000 Allocated corporate overhead 252,000 786,600 Other general and administration 557,900 3,759,000 Required: a. Compute divisional operating income for the two divisions. Ignore taxes.

Answer 1

Lake Region Coastal region

Operating income ($) 678,800. 2,009,400.

Step-by-step explanation:

Lake Region Coastal region

$'000 $'000

Sales revenue 4,200 13,110

Cost of sales (2,711) (6.555)

Gross profit 1,488.7 6,555

Allocated overhead (252) (786.6)

Other general overhead (557.9) ( 3,759)

Operating income 678.8 2,009.4

Lake Region Coastal region

Operating income 678,800. 2,009,400.