Thomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions, as profit centers. The chief executive officer (CEO) evaluates divisional performance, using operating income as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31: Line Item Description Amount RevenuesN Region $842,200 RevenuesS Region 1,011,000 RevenuesW Region 1,765,900 Operating ExpensesN Region 533,700 Operating ExpensesS Region 601,700 Operating ExpensesW Region 1,067,900 Corporate ExpensesDispatching 437,000 Corporate ExpensesEquipment Management 184,800 Corporate ExpensesTreasurers 128,100 General Corporate Officers Salaries 282,900 The company operates three support departments: the Dispatching Department, the Equipment Management Department, and the Treasurers Department. The Dispatching Department manages the scheduling and releasing of completed trains. The Equipment Management Department manages the railroad cars inventories. It makes sure the right freight cars are at the right place at the right time. The Treasurers Department conducts a variety of services for the company as a whole. The following additional information has been gathered: Line Item Description North South West Number of scheduled trains 4,800 5,700 8,500 Number of railroad cars in inventory 1,100 1,800 1,500 Required: Question Content Area 1. Prepare quarterly income statements showing operating income for the three regions. Use three column headings: North, South, and West. Do not round your interim calculations. Thomas Railroad Company Divisional Income Statements For the Quarter Ended December 31 Line Item Description North South West Revenues $Revenues $Revenues $Revenues Operating expenses Operating expenses Operating expenses Operating expenses Operating income before support department allocations $Operating income before support department allocations $Operating income before support department allocations $Operating income before support department allocations Support department allocations: Dispatching $Dispatching $Dispatching $Dispatching Equipment Management Equipment Management Equipment Management Equipment Management Total support department allocations $Total support department allocations $Total support department allocations $Total support department allocations Operating income $Operating income $Operating income $Operating income Question Content Area 2. What is the profit margin of each region? Round to one decimal place. Division Profit Margin North Region fill in the blank 1 of 3 % South Region fill in the blank 2 of 3 % West Region fill in the blank 3 of 3 % Identify the most successful region according to the profit margin. 3. What would you include in a recommendation to the CEO for a better method for evaluating the performance of the regions? a. The method used to evaluate the performance of the regions should be reevaluated. b. A better regional performance measure would be the return on investment (operating income divided by regional assets). c. A better regional performance measure would be the residual income (operating income less a minimal return on regional assets). d. None of these choices would be included. e. All of these choices (a, b & c) would be included