Profit Center Responsibility Reporting ohnson Products Inc. has three regional divisions organized as profit centers. The chief executive officer ( quarterly income and expense accounts were previded from the trial balance as of December 31,2016 CEO) evalustes divisional performance, using income from operations as a percent of revenues. The following $1,040,700 1,201,700 2,207,200 659,500 715,200 ,334,800 58,300 591,300 171,000 49,500 Revenues-Central Operating Expenses-West Operating Expenses-Central Corporate Expenses-Customer Support General Corporate Ofmicer's Salaries The company operates three service departments. Shareholder Relations Customer Suppor and Legal The Shareholder Relations Departme, e a esvarety of se ees er ,hareholder, are o gam rhe Customer Support Department is the company's point of contact for new service, complaints, and requests for repair. The department beleves that the number of oustomer contacts is an activity base for this work. T Legal Department provides legal services for division managenent. The department believes that the number of hours bied i, an achty base f, this m. The flo-adderul ident on has been Spared East st Central 9,800 300 5,500 6,600 1,000 1,500 Number of customer contacts Number of hours billed Required: quarterly income statements showing income from operations for the three divisions, Usf three column headings: East, West, and Central. Do not round your interim calculations Johnson Products Inc Divisional Income Stabements Previous Nexb Divisional Income Statements East West Central Revenues Operating expenses Income from operations before service department chargers Less service department charges: Customer support Legal Subtotal Income from operations 2. What is the profit margin of each division? Round to one decimal place. Division East Division West Division Central Division Identify the most successful division according to the profit margin Profit Margin 3. What would you include in a recommendation to the CEO for a better method for evaluating the performance of the divisions? a. The method used to evaluate the performance of the divisions should be reevaluated. b. A better divisional performance measure would be the rate of return on investment (income from operations divided by divisional assets). c. A better divisional performance measure would be the residual income (income from operations less a minimal return on divisional assets) d. None of these choices would be included. e. All of these choices (a, b & c) would be included