Case study

CASE STUDY SITUATION You are to assume the role of accountant at THE COLONEL INSURANCE COMPANY, an insurance company that specializes in automobile insurance. The assistant controller has asked you to put together a financial report outlining the responsibility center's various budgets. You have also been asked by the assistant controller to end the presentation with a short discussion on THE COLONEL INSURANCE COMPANY's long-term financial plans using accounting performance measures. Below is a profit & loss summary of the prior month: The Colonel Insurance Company Region III/Region IV CentralWestern Total Region Region I Mid-Atlantic Southern 4,625,397 2,158,954 3,154,846 1,115,487 11,054,684 2,946,5231,254,658 2,541,653 256,254 Premiums Earned Losses 7,588,459 845,625 Loss Adjustment 121,541 199,265 75,642 652,702 Expense General Expenses - Direct 851,454 415,265 405,165265,9821,937,866 General Expenses Overhead Operating 8,763 (71,762)875,657 571,166 367,490 Income The assistant controller also provided you with the total expenses related to corporate costs, not directly affiliated with a specific regional profit center. That total is $801,625 YOUR CHALLENGE With this information, you can now allocate the corporate costs to each of the four regions. Once you've calculated the overhead expenses per region, re-calculate the Operating Income and be prepared to present your findings to the assistant controller. Be sure to outline the performance of each region post-overhead inclusion and how it may affect strategic company goals