Blocker Enterprises, Inc

question 75

Essay

Blocker Enterprises, Inc., has two operating divisions, one manufactures farm machinery and the other manufactures office furniture. Both divisions are considered separate components as defined by SFAS No. 144. The management of Blocker Enterprises wants to focus on the manufacturing of farm machinery and accordingly adopted a formal plan to sell the office furniture division on September 20, 2011. The sale was completed on March 10, 2012. At December 31, 2011, the office furniture component was considered as held for sale.
On December 31, 2011, the company's fiscal year-end, the book value of the assets of the office furniture division was $1,000,000. On that date, the fair value of the assets, less costs to sell, was $800,000. The before-tax operating loss of the division for the year was $130,000. The company's tax rate is 40%. The after-tax income from continuing operations for 2011 was $350,000.
Prepare a partial income statement for 2011 beginning with income from continuing operations. Ignore EPS disclosures.

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Definitions:

Budgeted Fixed

Refers to the portion of a budget that represents fixed costs, which do not change with the level of activity within a certain range.

Manufacturing Overhead Applied

The portion of production overhead costs assigned to each unit of product based on a predetermined overhead rate, including indirect costs like utilities and rent.

Manufacturing Overhead Applied

The allocation of estimated manufacturing overhead costs to individual units of production on a consistent basis.

Manufacturing Overhead Applied

The process of allocating indirect manufacturing costs, such as utilities and rent, to individual units of production based on a predetermined rate or method.