Traxonia Rairoad inc. has three regional divisions organized as proft centers. The chief executive officer (CEO) evaluates divisional performance using income from operations as a percent of revenues. The following quarterly income and expense accounts were provided from the balance as of December 31, 2016 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 $ 862.000 1,036.000 1,890,000 563.500 621.840 1,167.900 150,000 360,000 252,000 274,500 The company operates three service departments Shareholder Relations, Customer Support, and Legal The Shareholder Relations Department conducts a variety of services for shareholders of the company The Customer Support Department is the company's point of contact for new service complaints, and requests for repair. The department believes that the number of customer contacts is an activity base for this work. The Legal Department provides legal services for division management. The department believes that the number of hours bied is an activity base for this work. The following additional information has been gathered Central East 5.000 West .000 Number of customer contacts Number of hours billed 1,400 2,000 2,200 R o nmentSessionLocators assignment-takeinprogressefalse eBook Show Me How Calculator Print Item Number of customer contacts East 5,000 1,400 West 6.000 2,000 Central 9.000 2,200 Number of hours billed Required: 1. Prepare quarterly income statements showing income from operations for the three divisions. Use three column headings: East West and Central 2. Identify the most successful division 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 divisions? Quarterly Income Statements 1. Prepare quarterly income statements showing income from operations for the three divisions. Use three column headings: East West, and Central TRAXONIA RAILROAD INC. Divisional Income Statements For the Quarter Ended December 31, 2016 East West Central Revenues 1. Prepare quarterly income statements showing income from operations for the three divisions. Use three column headings: East, West, and Central TRAXONIA RAILROAD INC Divisional Income Statements For the Quarter Ended December 31, 2016 Central Revenues Operating expenses Income from operations before service department charges Less service department charges Customer Support Legal Total service department charges 9 Income from operations 2. Compute the profit margin for each division Note: Enter percentage rounded two decimal places (eg. 22547 is 22 56%) Pront Margin Division East Division West Division Central Division Now identity the most successful division 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 divisions? What is a major weakness of me present method? A major weakness of the present method is that the assets invested in each division are not considered nonfinancial drivers are not identified a full year's income is needed for assessment there is no weakness. The present method works wel the service department charges are incorrectly located Which of the following methods would better evaluate divisional performance? Check out that apply there is no weakness. The present method works well. the service department charges are incorrectly allocated. Which of the following methods would better evaluate divisional performance? Check all that apply. Utilizing transfer pricing between divisions Focusing on controllable revenues and expenses Considering residual income (income from operations less a minimal return on divisional assets) Including direct and indirect operating expenses for each division None of these. The present method works well Completing a balanced Scorecard for each service department Computing the rate of return on investment (income from operations divided by divisional assets)