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	$1,104,600
RevenuesS Region	1,297,000
RevenuesW Region	2,362,300
Operating ExpensesN Region	700,000
Operating ExpensesS Region	771,900
Operating ExpensesW Region	1,428,600
Corporate ExpensesDispatching	592,800
Corporate ExpensesEquipment Management	223,600
Corporate ExpensesTreasurers	168,000
General Corporate Officers Salaries	371,000

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	5,700	6,800	10,300
Number of railroad cars in inventory	1,100	1,700	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.