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 daho. 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 Tota Billings Great Falls Clayton 20,000,000 $7,000,000 $8,000,000 5,000,000 Sales Operating expenses 11,170,000 3,500,000 4,500,000 3,170,000 Direct labor Variable overhead 439,000 176,000 166,000 97,000 2,530,000 670,000 Equipment depreciation 955.000 905.000 2,440,000 850,000 650,000 940,000 Facility expense Local administrative expense 429,000 143,000 173,000 113,000 500,000 Regional administrative expenset 175,000 200,000 125,000 Corporate administrative expenset 1,600,000 560,000 640,000 400,000 7,234,000 Total operating expense 19,108,000 6,359,000 5,515,000 892,000 641,000 766,000 Net operating income (loss) 000 *Local administrative expenses are the administrative expenses incurred at the check processing centers. tRegional administrative expenses are allocated to the check processing centers based on sales. tCorporate administrative expenses are charged to segments of the company such as the Rocky Mountain Region and the check processing centers at the rate of 8% of their sales