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Red Line Ralload inc has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using income from operations as
Red Line Ralload inc has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of fevenues. The following quarterfy income and expense accounts were provided from the thal balance as of December 31 : The company operales theee service departients. Shareholder Retations, Custonter Support, and Legal. The shareholder Relations Departrent conducts a varefy of The company operates three service departments Shareholder Relasons, Customer Support, and Legal. The Shareholder Relabons 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 additionai information has been gathered: Required: 1. Prepare quarierly income statements showing income trom operabons for the three dwisions Use three column headings: Ease, West, and Cenival 2. idenoly the most successtar drision according to the proft margin Enter percentage rounded no decimal paices (e o 0.22547 is 22.55% ) 3. What would you inclide in a recommendaton to the CEO tor a bemer method far evaluasing the pertormance of the dusions? What is a nayor. weakness of the present method? Red Line Railroad Inc. Divisional income Statements For the Quarter Ended December 31 i 2 Revenues 3 Operating expenses 4 Income from operations before service department charges Service department charges: 6 Customer Support 7. Legal 8. Total service department charges 9. Income from operations 2. Compute the profit margin for each division. Enter percentage rounded wo decimal places (e.g. 22547 is 22.55\%). Now identify the most successful division according to the profit margin
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