1.50 points Haley Romeros had just been appointed vice president of the Rocky Mountain Region of the Bank Services Corporation (BSC). The company provides check processing services for small banks. The banks presented for or payment to Bsc. records the data on each check in a computerized database. then sends the electronically to the nearest Federal Reserve Bank check-clearing center where the appropriate transfers of funds are made between banks. The Rocky Mountain Region has three processing centers, which are located in Billings, Montana; Great Falls, Montana, and Clayton, Prior to her promotion to vice president, Ms. Romeros had been the manager of a check processing center in New Jersey Immediately after assuming her new position, Ms. Romeros requested a complete financial report for the just-ended fiscal year from the region's controller, John Littlebear, Ms. Romeros specified that the financial report should follow the standardized format required by corporate headquarters for all regional performance reports. That follows: Bank Services Corporation (BSC) Mountain Region Financial Performance Check Processing Centers Total Billings Great Falls Clayton S17.000.000 $7,000,000 s 8,000,000 s 2.000.000 Operating expenses 9,100,000 3.200.000 4,200,000 1.700.000 Variable overhead 442.000 179.000 169.000 94,000 Equipment depreciation 2.274.000 952,000 902.000 420,000 Facility expense 2,530,000 880.000 680,000 970,000 Local administrative expense 438.000 146,000 176.000 116.000 Regional administrative expenset 510.000 210,000 240,000 Corporate administrative expensel 1,360,000 560.000 160,000 Total operating expense 16,654,000 6,127,000 7,007,000 3,520.000 Net operating income (oss) 346.000 873.000 993.000 $(1.520,000) *Local administrative expenses are the administrative expenses incurred at the check processing centers. tRegional expenses are administrative the centers based on sales expenses are charged to segments of the company such as the Rocky Mountain 1Corporate Region and the check process centers at the rate of 8% of their sales Upon seeing this Ms. Romeros summoned John Littlebear for an explanation. the story Clayton? have a loss the previous year No, the Clayton facility has had a nice profit every year sinceit was opened six years ago. but Romeros: Clayton lost a big contract this year. Why? Little bear. One of our national competitors entered the ocal market and bid very aggressively on the