23-2A Profit center rofit center responsibility reporting for a service company Red Line Railroad Inc. has three regional divisions organize Obj. 3 tive officer (CEO) evaluates divisional performance, using of revenues. The following quarterly income and evaluates divisional performance, using income from operations as a percent trial balance as of December 31: Tuwing quarterly income and expense accounts were provided from the Revenues-East $1,400,000 Revenues-West 2,000,000 Revenues-Central 3,200,000 Operating Expenses-East 800,000 Operating Expenses-West 1,350,000 Operating Expenses ---Central 1,900,000 Corporate Expenses---Shareholder Relations 300,000 Corporate Expenses-Customer Support 320,000 Corporate Expenses --Legal 500,000 General Corporate Officers' Salaries 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 sharehold- ers of the company. The Customer Support Department is the company'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 work. The Legal Department provides legal ser- vices for division management. The department believes that the number of hours billed is an activity base for this work. The following additional information has been gathered: East West Central Number of customer contacts 1,500 2,800 5.700 Number of hours billed 750 1,750 1,500 Instructions 1. Prepare quarterly income statements showing income from operations for the three divisions. Use three column headings: East, West, and Central. 2. 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 nerformance of the divisions. In your recommendation, identify the major weakness of the present method