Doggy World operates a chain of pet stores in the Midwest. The manager of each store reports to the regional manager, who, in turn, reports to the headquarters in Milwaukee, Wisconsin. The actual income statements for the Dayton store, the Ohio region (including the Dayton store), and the company as a whole (including the Ohio region) for July 2011 are as follows:

Budgeted amounts for July were as follows:

Requirements
1. Prepare a report for July 2011 that shows the performance of the Dayton store, the Ohio region, and the company as a whole.
2. As the Ohio regional manager, would you investigate the Dayton store on the basis of this report? Why or why not?
3. Should Doggy World prepare the master budget? Briefly discuss the benefits of budgeting. Base your discussion on Doggy World's performance report.

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DOGGY WORLD Income Statement For the month ended July 31, 2011 Companywide 1,760,000 4,400,000 Ohio Dayton $ 158,400 Revenue Expenses: Regional manager/headquarters office Cost of materials Salary expense Depreciation expense Utilities expense Rent expense 880,000 440,000 91,000 46,600 34,500 141,0201,550,100 $17,380 $ 209,900 85,536 41,184 7,800 4,000 2,500 - $58,000 $ 122,000 1,760,000 1,100,000 439,000 264,000 178,000 Total expenses 3,863,000 Operating income 537,000 DOGGY WORLD Budgeted Income Statement For the month ended July 31, 2011 Davton Ohio Companywide Revenue $ 173,400 1,883,000 $ 4,650,000 Expenses: Regional manager/headquarters office $ Cost of materials Salary expense Depreciation expense Utilities expense Rent expense $ 64,600124,000 2,092,500 470,750 | 1,162,500 446,000 274,000 169,000 91,902 1,035,650 41,616| 7,800 4,900 3,400 87,500 54,600 32,700 149,618 1,745,800 $ 23,782 $ 137,200 Total expenses 4,268,000 Operating income 382,000