Exercise 14-24 (Algo) Compute Divisional Income (LO 14-1) Lauderdale Corporation is organized in three geographical divisions (regions) with managers responsible for revenues, costs, and assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance. Corporate overhead (all fixed) is allocated to the regions based on regional gross margin (regional revenue minus regional cost of sales).

The following information is from Lauderdale's first year of operations:

Region I Region II Region III Total Corporation

Revenues $1,210,000 $1,660,000 $2,260,000 $5,130,000

Cost of sales $455,000 $815,000 $1,145,000 $2,415,000

Selling, General and Administrative (all fixed) $435,000 $645,000 $865,000 $1,945,000

Corporate overhead $452,000

Required: Compute divisional operating income for the three regions. Ignore taxes. How have these regions performed?

Complete this question by entering your answers in the tabs below.

• Required A
• Required B

How have these regions performed?

• Required A
• Required B

Compute divisional operating income for the three regions. Ignore taxes. Note: Do not round the "Overhead rate" value. Round your final answers to the nearest whole dollar amount.

	Region I	Region II	Region III
Divisional income

1a. Based on division income, which region performed the best?
1b. Based on division income, which region performed the worst?
2a. Which region has the highest gross margin percentage?
2b. Which region has the lowest gross margin percentage?
3a. Which region has the highest operating margin percentage?
3b. Which region has the lowest operating margin percentage?