23-2A Profit center responsibility reporting for a service company Obj. 3 Red Line Railroad Inc. has three regional divisions organized as rofit 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 HOW ME HO from the trial balance as of December 31 EXCEL TEMPLATE 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' Salaries $1,400,000 2,000,000 3,200,000 800,000 1,350,000 1,900,000 300,000 320,000 500,000 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 ompany's 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 vork. The Legal Department provides legal services for division management. Thoe department believes that the number of hours billed is an activity base for this work. The following additional information has been gathered: Number of customer contacts Number of hours billed East 1,500 750 2,800 1,750 Central 5,700 1,500 Instructions Prepare quarterly income statements showing income from operations for the three divisions. Use three column headings: East, West, and Central. k Figure: Income from operations, West Division, $341,650 Identify the most successful division according to the profit margin. (Round to the nearest whole percent.) Provide a recommendation to the CEO for a better method for evaluating the performance of the divisions. In your recommendation, identify the major weakness of the present method