Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Revenues for the Spread sheet are listed in the text book portion. I am not able to make changes to the spreadsheet to make

The Revenues for the Spread sheet are listed in the text book portion. I am not able to make changes to the spreadsheet to make the column wider. image text in transcribed

image text in transcribed

image text in transcribed

PR 24-2A Profit center responsibility reporting for a service company Red Line Railroad 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 revenues. The following quarterly income and OBJ.3 expense accounts were provided from the trial balance as of December 31: 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 $1,400,000 2,000,000 3,200,000 800,000 1,350,000 1,900,000 300,000 320,000 500,000 1,200,000 (Continued) Decentralized Operations The company operates three service departments: sha Support, for shareholders corporate officers' salaries are not controllable by di Support Department is the hapter 24 Shareholder Relat Legal. The Shareholder Relations Department conducts of the company. The shareholder Relations and a variety of Department agement, nd sion mana company's point of contact for for repair. The department believes that the numberpa new service of cust itybase for this work. The Legal Department provides legal ement. The department believes that the number of hours billed for d is work. The following additional information has been gathered: an acthvhy Number of customer contacts Number of hours billed East West Central 1,500 2,800 5,700 750 1,750 1,500 Instructions 1. Prepare quarterly income statements showing income from operations fo n operations for divisions. Use three column headings: East, West, and Central. 2. Identify the most successful division according to the profit margin. 3. Provide a recommendation to the CEO for a better method for performance of the divisions. In your recommendation, identify the major weale of the present method. PR 24-3A Divisional income statommnt . | $ % , 158 & Center , Alignment Numbe Font RED LINE RAILROAD INC Divisional Income Statements For the Quarter Ended December 31 East Central Revenues Operating expenses income tom operations before service dept charges 600,0001 Less sence department charges. 1,350,0001.900 Ls 650 000 19 800,000 ####### 21 Customer support Legal Total S 43,000 93,750 S 141,750 S 458.250 89,600 182,400 187,500 S 369,900 341,650 S930,100 308,350 Income from operations Supporting schedules: West Central Total Number of customer contacts Number of hours billed 30 Service CostOutput .Rate Customer contact rate Legal billing rate per contact per hour Pront margn Income from Profit East Division West DMSion Central Diision S458.250 $1 400 000 341,650$2.000 000 $930,100 3.200.000 33% 29% Based on profit margin the East Dndision has the highest performance Pr. 24 2A O Type here to search 7CHRONOS F4 F6 F7 F8 F9

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions