STRATEGIC BUSINESS ANALYSIS - RESPONSIBILITY ACCOUNTING

The starting point for evaluating investment centers is typically with reviewing segmented income for each investment center. Segmented income is segment revenue minus segment expenses. Top management is interested in the level of profit that each division generates, and segmented income gives them this information. Assessment 2: The segmented income statements of the two divisions of Red Rose Distillers for the year ended December 31, 2020 is presented below: Division A Division B Sales P 5,000,000 P 8,000,000 Cost of Goods Sold 1,500.000 3.000.000 Gross Margin P 3,500.000 P 5,000,000 Allocated Overhead 450.000 780,000 Selling and Admin Expense 1,200 000 1,700.000 Operating Income P 1,850,000 P 2,520,000 Income Tax (30%) 555,000 756,000 Net Income P 1.295.000 P 1,764,000