Hartz Corporation is looking at the prior years' results and needs some help in breaking out the income statement by division. They have the following income statement: Revenues Operating Expenses Customer Support Legal Expenses Shareholder Relations General Corporate Expenses 6,500,000 4,050,000 320,000 500,000 325,000 1,200,000 Total Expenses 6,395,000 Net Income 105,000 Profit Margin 1.62% Revenues and operating expenses are broken out by division as follows: Revenues Operating Expenses East 1,500,000 800,000 West 2,000,000 1,350,000 Central 3,000,000 1,900,000 Total 6,500,000 4,050,000 Customer support expenses are allocated based on customer contacts with the following information: Total Customer Support Expenses Customer Contacts East Customer Contacts West Customer Contacts - Central $320,000 1,500 2,800 5,700 Legal expenses are allocated based on hours billed with the following information: Total Legal Expenses Hours Billed - East Hours Billed - West Hours Billed - Central $500,000 750 1,750 1,500 Shareholder relations expenses were $325,000 and are allocated based on revenues General corporate expenses were $1,200,000 and are allocated evenly among the three divisions. Required Chapter 23 Case West East Central Total 1,500,000 2,000,000 3,000,000 6,500,000 Revenues Total Customer Support Expenses Contacts - East Contacts - West Contacts - Central 320,000 1,500 2,800 5,700 800,000 1,350,000 1,900,000 4,050,000 Operating Expenses Customer Support Legal Shareholder Relations General Corporate Legal Expenses Hours Billed - East Hours Billed - West Hours Billed - Central 500,000 750 1,750 1,500 Total Expenses Shareholder Relations Expense 325,000 Net Income General Corporate Expenses 1,200,000 Profit Margin Prepare an income statement by division (and the totals) showing the revenues, all expenses and net income. Calculate the profit margin for each division and the total (net income / revenues) Part 2 - You should have found that one division had a loss while the other two divisions are profitable. Hartz is looking at closing that losing division. If a division is closed, the following changes will take place: Revenues and operating expenses would remain the same for the existing divisions, would be none for the dropped division. Customer support expenses would be reduced to $230,400 Legal expenses would be reduced to $281,250 Shareholder relations expenses would be reduced to $270,000 General corporate expenses would remain at $1,200,000 . Required Prepare an income statement (same as first one) showing the two remaining divisions and the total. Calculate the profit margin for each division and the total profit margin for the entire company. Hartz Corporation is looking at the prior years' results and needs some help in breaking out the income statement by division. They have the following income statement: Revenues Operating Expenses Customer Support Legal Expenses Shareholder Relations General Corporate Expenses 6,500,000 4,050,000 320,000 500,000 325,000 1,200,000 Total Expenses 6,395,000 Net Income 105,000 Profit Margin 1.62% Revenues and operating expenses are broken out by division as follows: Revenues Operating Expenses East 1,500,000 800,000 West 2,000,000 1,350,000 Central 3,000,000 1,900,000 Total 6,500,000 4,050,000 Customer support expenses are allocated based on customer contacts with the following information: Total Customer Support Expenses Customer Contacts East Customer Contacts West Customer Contacts - Central $320,000 1,500 2,800 5,700 Legal expenses are allocated based on hours billed with the following information: Total Legal Expenses Hours Billed - East Hours Billed - West Hours Billed - Central $500,000 750 1,750 1,500 Shareholder relations expenses were $325,000 and are allocated based on revenues General corporate expenses were $1,200,000 and are allocated evenly among the three divisions. Required Chapter 23 Case West East Central Total 1,500,000 2,000,000 3,000,000 6,500,000 Revenues Total Customer Support Expenses Contacts - East Contacts - West Contacts - Central 320,000 1,500 2,800 5,700 800,000 1,350,000 1,900,000 4,050,000 Operating Expenses Customer Support Legal Shareholder Relations General Corporate Legal Expenses Hours Billed - East Hours Billed - West Hours Billed - Central 500,000 750 1,750 1,500 Total Expenses Shareholder Relations Expense 325,000 Net Income General Corporate Expenses 1,200,000 Profit Margin Prepare an income statement by division (and the totals) showing the revenues, all expenses and net income. Calculate the profit margin for each division and the total (net income / revenues) Part 2 - You should have found that one division had a loss while the other two divisions are profitable. Hartz is looking at closing that losing division. If a division is closed, the following changes will take place: Revenues and operating expenses would remain the same for the existing divisions, would be none for the dropped division. Customer support expenses would be reduced to $230,400 Legal expenses would be reduced to $281,250 Shareholder relations expenses would be reduced to $270,000 General corporate expenses would remain at $1,200,000 . Required Prepare an income statement (same as first one) showing the two remaining divisions and the total. Calculate the profit margin for each division and the total profit margin for the entire company