60.1K

Verified Solution

Link Copied!

Profit center responsibility reporting for a service company Instructions Quarterly Income Statements Final Questions Instructions Red Line Railroad Inc has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using income from operations as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance is of December 31 $1.400,000 Revenues East Revenues-West Revenues Central Operating Expenses East Operating Expenses West Operating Expenses Central Corporate Expenses Shareholder Relations Corporate Expenses Customer Support Corporate Expenses--Legal General Corporate Officers Salanes 2,000,000 3.200.000 300,000 1.350.000 1.000.000 300.000 320.000 500,000 1.200,000 The company operates three service departments Shareholder Relations, Customer Support and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company The Customer Support Department is the company's point of contact for new service complaints and requests for repair. The department beleves that the number of customer contacts is an activity base for this work The Legal Department provides legal services for division management. The department believes that the number of hours bied is an activity base for the Profit center responsibility reporting for a service company Instructions Quarterly Income Statements Final Question Instructions General Corporate Officers Salaries 1,200,000 The company operates three service departments. Shareholder Relations, Customer Support, and Legal The Shareholder Relations Department conducs a variety of services for shareholders of the company. The Customer Support Department is the company point of contact for new service complaints and requests for repair. The department believes that the number of customer contacts is an activity base for this work. The Legal Department provides legal services for division management The department believes that the number of hours billed is an activity bare for this work. The following additional information has been gathered East 1,500 West 2,800 Number of customer contacts Number of hours billed Central 5,700 1,500 760 1.750 Required: 1. Prepare quarterly income statements showing income from operations for the twee din Use three column headings East West and Central 2 Wendly the most successful win according to the prodrmaron. Enter perceritage as whole number tego 16 equals 10) 3 What would you include in a recommendation to the CEO nya better ethod for evaluating the performance of the dish awar weakness of the present method

Answer & Explanation Solved by verified expert

See Answer