Question
Profit Center Responsibility Reporting Carry On Freight Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using
Profit Center Responsibility Reporting
Carry On Freight Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31, 20Y3.
Revenues?Air Division | $ 1,025,100 |
Revenues?Rail Division | 1,202,100 |
Revenues?Truck Division | 2,203,600 |
Operating Expenses?Air Division | 649,600 |
Operating Expenses?Rail Division | 715,400 |
Operating Expenses?Truck Division | 1,332,600 |
Corporate Expenses?Shareholder Relations | 155,900 |
Corporate Expenses?Customer Support | 595,000 |
Corporate Expenses?Legal | 164,000 |
General Corporate Officers' Salaries | 344,300 |
The company operates three service departments: Shareholder Relations, Customer Support, and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company. The Customer Support Department is the company's point of contact for new service, complaints, and requests for repair. The department believes that the number of customer contacts is an activity base for this work. The Legal Department provides legal services for division management. The department believes that the number of hours billed is an activity base for this work. The following additional information has been gathered:
Air | Rail | Truck | ||||
Number of customer contacts | 4,400 | 5,300 | 7,800 | |||
Number of hours billed | 1,000 | 1,600 | 1,400 |
Division management does not control activities related to the shareholder relations department and general corporate officers' salaries.
For the Quarter Ended December 31, 20Y3 Air Rail Truck Revenues 1,025,100 Operating expenses 649,600 Operating income before service department charges 375,500 Less service department charges: Customer support Legal 100100 Total service department charges Operating income 2. What is the profit margin percentage of each division? Round to one decimal place. Division Profit Margin Air Division /o Rail Division Truck DivisionStep by Step Solution
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