The Dinkle and Frizell Dental Clinic provides both preventive and orthodontic dental services. The two owners, Reese Dinkle and Anita Frizell, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the centers: Reese for Preventive Services and Anita for Orthodontic Services. Each month, they prepare an income statement for the two centers to evaluate performance and make decisions about how to improve the operational efficiency and profitability of the clinic. Recently, they have been concerned about the profitability of the Preventive Services operations. For several months, it has been reporting a loss. The responsibility report for the month of May 2022 is shown here.

In addition, the owners know that the investment in operating assets at the beginning of the month was $82,400, and it was $77,600 at the end of the month. They have asked for your assistance in evaluating their current performance reporting system.

Instructions
a. Prepare an investment center responsibility report for the Preventative Services segment for May 2022.
b. Write a memo to the owners discussing the deficiencies of their current reporting system.

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Service revenue Variable costs Filling materials Novocain Supplies Dental assistant wages Utilities Total variable costs Actual $40,000 5,000 3,900 1,900 2,500 500 13,800 Difference from Budget $1,000 F 100 U 100 U 350 F 0 110 U 40 F