nonfinancial goals, and these goals are integrated into the budget. Actual performance Deaner includes the New Haven, Boston, and Portland stones. The Cool District's persones performance measures are crcceded. The manager in Portland decided not to participate the bones Cases Classic Clothes in a retailer that sells to professional women in the son The stores in upscale shopping centers, and the organizational structure Corps Segend srce, and stores. Each region consists of two or more districts, cach district of the em Fach stare, district, and region has been established as otce. A levele any uses a Teaponsability accounting system focusing on information and knowledge rather than a Nare and control. Each year, manager, in consultation with the supervis, iacul 12-1, 12-2, 12-5) a Case 12-52 mento Accm ng Bone Movie month sure is S50.000 The New England Region consists of the Coastal District and the Inland Deric. The Contal 1. Operating moden stor 191215 2 Portland stores open ex been up to expectations in the past for the month of May, the detrict manager has set performance come for May 12,175 cheine. Since the district manager is unsare what type of bows will encourage bener performance, the New Haven manager will receive a bonus based on sales in excess of budgeted tales $570,000, while Se Boston manager will receive a bonus based on operating income in excess of budget. The company's operating income goal for each store is 12 percent of sales. The budgeted sales revenue ke the Bordom Other pertinent data for May are as follow . Constal District sales revenue was $1.500,000, and its cont of goods sold amounted to 5633,750 . The Coastal District spent $75,000 on advertising . General and administrative expenses for the Coastal District amounted to 5180.000 . At the New Haven store, sales were 40 percent of Coastal District sales, while sale at the Best store were 35 percent of district sales. The cost of goods sold in both New Haven and Bosse 42 percent of sales Variable selling expenses (sales commissions) were 6 percent of sales for all stores, districts, and regions . Variable administrative expenses were 2.5 percent of sales for all stores, districts, and repic Maintenance cost includes janitorial and repair services and is a direct cost for each store. The store manager has complete control over this outlay. Maintenance costs were incurred as follows New Haven, 57.500, Boston, $600; and Portland, $4.500 Advertising is considered a direct cost for each store and is completely under the control of the store manager. The New Haven store spent two-thirds of the Coastal District total outlay for advertising. which was 10 times the amount spent in Boston on advertising Coastal District rental expense amounted to $150.000, . The rental expenses at the New Haven store were 40 percent of the Coastal District's total, while the Boston store incurred 30 percent of the district total. District expenses were allocated to the stores based on sales New England Region general and administrative expenses of $165.000 were allocated to the Coastal District. These expenses were in turn, allocated equally to the district's three stores Required Boston stores 1. Prepare the May segmented income statement for the Coastal District and for the New Haven and 2. Compute the Portland store's operating income for Muy Discuss the impact of the responsibility-accounting system and bonus Mructure on the manager behavior and the effect of their behavior on the financial results for the New Haven more and the + The assistant controller for the New England Region, Jack Isner, has been a close friend of the New Haven store manager for over 20 years. When Isner saw the segmented income statements Prepared in requirement 1. he realized that the New Haven store manager had really gone over board on advertising expenditures. To make his friend look better to the regional management, he Foclassified $25.000 of the advertising expenditures as miscellaneous expenses, and buried them in Boston store