The following information is from Musical Inc. Ltd. It sells musical instruments with three stores in three different states across Australia. The July income statement for all stores is shown below:

VICTORIA Store NSW Store QUEENSLAND Store

Sales $52 920 $32 340$74 970

Cost of goods sold 27 930 14 700 36 750

Gross profit $24 990 $17 640 $38 220

Expenses

Selling expenses 3 087 1 470 4 704

Wages expense 11 760 8 820 13 230

Costs allocated fromhead office 8 085 4 410 22 050

Total expenses $22 932 $14 700 $39 984

Operating income (loss) $2 058 $ 2 940($1 764)

i. Explain on the operating income results for each store

ii. Now assume the costs allocated from corporate is an uncontrollable cost for each store. How does this change your assessment of each store? Explain.

iii. The owner of Advertising Pro wants to adopt the Balanced Scorecard in the company. There are two divisions: Video production and Radio. He has asked you to explain how BSC can improve his company's performance. Write a short report to convince him to implement BSC, and justify your reasons.