Solution-What are the budgeted operating profits

What are the budgeted operating profits

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Question - Corporate overhead costs (in thousands of dollars) are expected to be $36,000 in year 8. Of the $36,000, $22,500 is fixed and $13,500 is variable, with respect to revenue. Division managers are evaluated and compensated in part on division operating profit relative to the budget.

Required -

a. Suppose corporate overhead is allocated to the two divisions based on relative revenue. What are the budgeted operating profits in each division for year 8 after the corporate costs are allocated?

b. At the end of year 8, actual corporate costs incurred (in thousands of dollars) were $21,000. Of the $21,000, $11,500 was fixed. Actual results (in thousands of dollars) in the two divisions are as follows.

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What are the budgeted operating profits

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Reference no: EM132574752

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