Haley Romeros had just been appointed vice president of the Rocky Mountain Region of the Bank Services Corporation (BSC). The company provides check processing services for small banks. The banks send checks presented for deposit or payment to BSC, which records the data on each check in a computerized database. BSC then sends the data electronically to the nearest Federal Reserve Bank check-clearing center where the appropriate transfers of funds are made between banks. The Rocky Mountain Region has three check processing centers, which are located in Billings, Montana; Great Falls, Montana; and Clayton, ldaho. Prior to her promotion to vice president, Ms. Romeros had been the manager of a check processing center in New Jersey. Immediately after assuming her new position, Ms. Romeros requested a complete financial report for the just-ended fiscal year from the region's controller, John Littlebear. Ms. Romeros specified that the financial report should follow the standardized format required by corporate headquarters for all regional performance reports. That report follows: Bank Services Corporation (BSC) Rocky Mountain Region Financial Performance Check Processing Centers Billings Great Falls Sales $20,000,000 $8,000,000 $8,000,000 4,000,000 Operating expenses: Direct labor 11,800,000 4,500,000 4.800.000 2,500,000 410,000 160,000 159,000 Variable overhead Equipment depreciation 2,410,000 900,000 900,000 610,000 Facility expense 2,140,000 700,000 490,000 950,000 Local administrative expense 458,000 149,000 179,000 130,000 Regional administrative expenset 400,000 160,000 160,000 80,000 Corporate administrative expense: 1,600,000 640,000 640,000 320,000 Total operating expense 19,218,000 7,209,000 7.328.000 4,681,000 Net operating income (loss 782,000 791,000 672,000 (681,000)