A-One Freight Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31, 20Y3.

RevenuesAir Division	$ 1,257,400
RevenuesRail Division	1,479,000
RevenuesTruck Division	2,723,500
Operating ExpensesAir Division	796,800
Operating ExpensesRail Division	880,200
Operating ExpensesTruck Division	1,647,000
Corporate ExpensesShareholder Relations	191,200
Corporate ExpensesCustomer Support	684,800
Corporate ExpensesLegal	250,100
General Corporate Officers Salaries	422,300

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 companys 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 services 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:

	Air		Rail		Truck
Number of customer contacts	5,400		6,400		9,600
Number of hours billed	1,000		1,600		1,500

Division management does not control activities related to the shareholder relations department and general corporate officers salaries.

Required:

a. Prepare quarterly income statements showing operating income for the three divisions. Use three column headings: Air, Rail, and Truck.

A-One Freight Inc.
Divisional Income Statements
For the Quarter Ended December 31, 20Y3
	Air	Rail	Truck
Revenues
Operating expenses
Operating income before service department charges
Less service department charges:
Customer support
Legal
Total service department charges
Operating income

1. Determine the customer contact rate by dividing service cost by output. For each division's customer support, multiply the customer contact rate by the number of customer contacts. Repeat this process for the other service department charges. Subtract the service department charges for a division from that division's operating income before such charges.

b. What is the profit margin percentage of each division? Round to one decimal place.

Division	Profit Margin
Air Division
Rail Division
Truck Division

Identify