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, Idaho. 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 Clayton Total Sales $20,000,000 $7,000,000 $ 8,000,000 $ 5,000,000 Operating expenses: Direct labor Variable overhead Equipment depreciation Facility expense Local administrative expense* Regional administrative expenset Corporate administrative expenset 12,000,000 4,000,000 5,300,000 150,000 791,000 490,000 157,000 196,000 640,000 423,000 2,312,000 2,050,000 381,000 490,000 1,600,000 160,000 691,000 690,000 127,000 171,500 560,000 2,700,000 113,000 830,000 870,000 97,000 122,500 400,000 Total operating expense 19,256,000 6,399,500 7,724,000 5,132,500 Net operating income (loss) $ 744,000 S 600,500 S 276,000 S (132,500) "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 Corporate 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