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Profit Center Responsibility Repoeting A. One Freight inc, has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using

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Profit Center Responsibility Repoeting A. One Freight inc, has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using operating income a: percent of revemues. The foliowing quarterly income and expense accounts were provided from the trial balance as of December 31,20Y3. The company operates three wervice departments: Shareneider Relations, Customer-Supporf, and Legal: The shareholder Rdations Department conducts a vanety of services for shareholders of the compary. The Custemer 5 upport Department as the company's point of coatact for new service, complants, and requests for repair. The department believes thst the number of custoener contacts is an sctivity base for this work. The Legal Department provides legal services for divisicn management the depaytment believes that the number of hours billed is an activity base for this work. The following additional information fas been gathered: Divisigh managemert does not control activites related to the sharehoider relations department and general corporate omicers salaries. Prepare quarterly income statements showing operating income for the three divisions. Use three column headings: Air, Rail, and Truck: b. What is the profit mattin peroentzge of esch division? Round to one decimal place. Identify the most succestul division accoesing to the profit margin percentege. 3. Al of the following statements are true regarding the evaluation of divisional performance for A-1 except: a. A better messure for A-t. Freight than the amount of operating income per dollar of earned revenue would be ether rate of return on investment or residual income, because beth measures incerporate asset utalation into the measures. b. A better measure for A-1 Freight than the amount of operating income per collar of eamed revenue would be either rate of return on investment of retidual inctime, because the amount of assets used by o diviven in earning a retura is a very Important consideration in evaluating divisional performance, ci. A better measure for A.1 Freight thin the amount of operating income per doliar of earmed revenue would be either rate of retum on investment or residual income, becaute this company tequires a signifcant investment in fixed ossets and distribution facitites. d. Alt of these choices are correct. Splect the correct answer from the choices above.t

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