service, complaints, and requests for repair. The department believes that the number of customet the monil For which costs might the Operating come, West $341,650 of December 31: officer (CEO) evaluates divisional performance, using operating income as a percent of te Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief en PR 24-2A Profit center responsibility reporting for a service company The following quarterly income and expense accounts were provided from the trial ba of the company. The Customer Support Department is the company's point of contact for the and Legal. The Shareholder Relations Department conducts a variety of services for shareholders The company operates three support departments: Shareholder Relations, Customer Support management. The department believes that the number of hours billed is a cost driver for this contacts is a cost driver for this work. The Legal Department provides legal services for division 2. $1,400,000 2,000,000 3,200,000 800,000 XCEL TEMPLATE 1,350,000 1,900,000 300,000 320,000 500,000 1,200,000 Revenues-East Revenues-West Revenues--Central Operating Expenses-East Operating Expenses-West Operating Expenses--Central Corporate Expenses--Shareholder Relations Corporate Expenses-Customer Support Corporate Expenses --Legal General Corporate Officers'Salaries work. The following additional information has been gathered: East 1,500 750 West 2,800 1,750 Number of customer contacts Number of hours billed Central 5,700 1,500 Instructions 1. Prepare quarterly income statements showing operating income for the three divisions. Use three column headings: East, West, and Central. 2. Identify the most successful division according to the profit margin. Round to the nearest whole percent. - Provide a recommendation to the CEO for a better unethod for evaluating the performance of the divisions. In your recommendation, identify the majcy weakness of the present method. 3. X 11 Calibri (Body) A- A Wrap Text Merge & Center aste B I U 3 x v fx K M - 1. West Central 8 9 20 21 22 23 24 25 26 27 D E G H Red Line Railroad Inc. Divisional Income Statements For the Quarter Ended December 31 East Revenues Operating expenses Operating income before support dept. allocations Less support department allocations: Customer support Legal Total Operating income Supporting schedules: East West Central Total 29 Number of customer contacts Number of hours billed 31 32 Service Cost Output Rate Customer contact rate Legal billing rate per contact per hour 34 372 Profit margin: Operating Income Profit Margin Reves 40 East Division West Division Central Division Based on profit margin, the Division has the highest performance 4 Pr. 24/10-2A + 29 MacBook Pro esc F? 000 Key essay answer here 5
