Homework Help is Here – Start Your Trial Now!
Business
Accounting
Cost-hierarchy income statement and allocation of corporate costs to customers. The Insurance Company insures homeowners in three regions of the United States: Eastern, Midwest, and South. In the past year, several hurricanes hit the Southern region of the United States, requiring payments to insured homeowners. Management of the company wishes to analyze the profitability of the three key regions and has gath- ered the following information: Eastern Midwest South Total $4,000,000 $2,600,000 $1,800,000 $8,400,000 6,362,000 $2,038,000 24.26% Revenue Customer-level costs 1,768,000 $1,080,000 $ 832,000 32% 2,920,000 1,674,000 Customer-level operating income Customer-level operating income percentage $ 126,000 7% 27% In addition to the customer-level costs above, the company also allocates $750,000 of corporate costs to each region based on the revenues of each region.

Cost-hierarchy income statement and allocation of corporate costs to customers. The Insurance Company insures homeowners in three regions of the United States: Eastern, Midwest, and South. In the past year, several hurricanes hit the Southern region of the United States, requiring payments to insured homeowners. Management of the company wishes to analyze the profitability of the three key regions and has gath- ered the following information: Eastern Midwest South Total $4,000,000 $2,600,000 $1,800,000 $8,400,000 6,362,000 $2,038,000 24.26% Revenue Customer-level costs 1,768,000 $1,080,000 $ 832,000 32% 2,920,000 1,674,000 Customer-level operating income Customer-level operating income percentage $ 126,000 7% 27% In addition to the customer-level costs above, the company also allocates $750,000 of corporate costs to each region based on the revenues of each region.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

What are the advantages and disadvantages of The Insurance Company allocating corporate costs to the regions?

Cost-hierarchy income statement and allocation of corporate costs to customers. The Insurance Company insures homeowners in three regions of the United States: Eastern, Midwest, and South. In the past year, several hurricanes hit the Southern region of the United States, requiring payments to insured homeowners. Management of the company wishes to analyze the profitability of the three key regions and has gath- ered the following information: Eastern Midwest South Total $4,000,000 $2,600,000 $1,800,000 $8,400,000 6,362,000 $2,038,000 24.26% Revenue Customer-level costs 1,768,000 $1,080,000 $ 832,000 32% 2,920,000 1,674,000 Customer-level operating income Customer-level operating income percentage $ 126,000 7% 27% In addition to the customer-level costs above, the company also allocates $750,000 of corporate costs to each region based on the revenues of each region.
Transcribed Image Text:Cost-hierarchy income statement and allocation of corporate costs to customers. The Insurance Company insures homeowners in three regions of the United States: Eastern, Midwest, and South. In the past year, several hurricanes hit the Southern region of the United States, requiring payments to insured homeowners. Management of the company wishes to analyze the profitability of the three key regions and has gath- ered the following information: Eastern Midwest South Total $4,000,000 $2,600,000 $1,800,000 $8,400,000 6,362,000 $2,038,000 24.26% Revenue Customer-level costs 1,768,000 $1,080,000 $ 832,000 32% 2,920,000 1,674,000 Customer-level operating income Customer-level operating income percentage $ 126,000 7% 27% In addition to the customer-level costs above, the company also allocates $750,000 of corporate costs to each region based on the revenues of each region.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Characteristics Of Insurance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS