Cat 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:

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 Cat World prepare the master budget? Briefly discuss the benefits of budgeting. Base your discussion on Cat World’s performance report.

Transcribed Image Text:

Revenue Expenses CAT WORLD Income Statements Month Ended July 31, 2011 Dayton Ohio $ 162,000 $ 1,800,000's Regional managedheadquarters office $ Cost of materials Salary expense Depreciation expense Utilities expense Rent expense Total expenses Operating income Companywide 4,500,000 S 56,000 $110,000 87,480 900,000 1,800,000 42,120 450,000 1,125,000 7,300 95,000 438,000 4,200 46,300 264,000 2,500 34,900 175,000 143,600 1,582,200 3,912,000 $ 18,400 $217,800 $ 588,000 Budgeted amounts for July were as follows: CAT WORLD Budgeted Income Statements Month Ended July 31, 2011 Dayton Ohio Companywide $ 176,000 $ 1,923,000 $ 4,750,000 Revenue Expenses Regional manager/headquarters office $ 62,600 5 112,000 Cost of materials 93,280 1,057,650 2,137,500 Salary expense Depreciation expense Utilities expense Rene expense 42.240 480,750 1,187,500 7,300 87,500 449,000 4,700 54,800 271,000 3,800 32,700 173,000 Total expenses 151,320 1,776,000 4,330,000 Operating income $ 24,680 $ 147,000 $ 420,000