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Profit Center Responsibility Reporting for Service Company Thomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions, as profit
Profit Center Responsibility Reporting for Service Company Thomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions, as profit centers. The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31: Revenues-N Region $1,016,400 1,203,100 Revenues-S Region Revenues-W Region 2,129,200 Operating Expenses-N Region 644,100 Operating Expenses-S Region 716,000 1,287,600 Operating Expenses-W Region Corporate Expenses-Dispatching 542,700 Corporate Expenses-Equipment Management 204,000 Corporate Expenses-Treasurer's 154,600 General Corporate Officers' Salaries 341,400 The company operates three service departments: the Dispatching Department, the Equipment Management Department, and the Treasurer's Department. The Dispatching Department manages the scheduling and releasing of completed trains. The Equipment Management Department manages the railroad cars inventories. It makes sure the right freight cars are at the right place at the right time. The Treasurer's Department conducts a variety of services for the company as a whole. The following additional information has been gathered: North South West 5,000 6,000 9,100 Number of scheduled trains Number of railroad cars in inventory 900 1,400 1,100 Required: 1. Prepare quarterly income statements showing income from operations for the three regions. Use three column headings: North, South, and West. Do not round your interim calculations. Thomas Railroad Company Divisional Income Statements For the Quarter Ended December 31 North South West $ Revenues Operating expenses Income from operations before service department charges $ Service department charges: Dispatching Equipment Management Total service department charges $ Income from operations 2. What is the profit margin of each division? Round to one decimal place Profit Margin Region North Region % South Region % West Region %
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