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.

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 Tota Billings Great Falls Clayton 20,000,000 9,000,000 8,000,000 3,000,000 Sales Operating expenses: Direct labor 12,200,000 5,500,000 4,700,000 2,000,000 Variable overhead 111,000 425,000 162,000 152,000 Equipment depreciation 2,086,000 693,000 793,000 600,000 Facility expense 2,110,000 000 510,000 890,000 Local administrative expense 387,000 129,000 159,000 99,000 Regional administrative expenset 350,000 157,500 140,000 52,500 Corporate administrative expenset 1,600,000 720,000 640,000 240,000 3,992,500 Total operating expense 19,158,000 8,071,500 7,094,000 842,000 928,500 906,000 (992,500) Net operating income (loss)