Lauderdale Corporation is organized in three geographical divisions (regions) with managers responsible for revenues, costs, and assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance. Corporate overhead (all fixed) is allocated to the regions based on regional gross margin (regional revenue minus regional cost of sales). The following information is from Lauderdale's first year of operations: Region I $1,204,000 452,000 426,000 Region II $1,654,000 812,000 636,000 Region III $2,254,000 1,142,000 856,000 Total Corporation $5,112,000 2,400,000 1,918,000 440,000 Revenues Cost of sales Selling, General and Administrative (all fixed) Corporate overhead Information on the division assets in the three regions of Lauderdale Corporation follows: $ 704,000 Region I Region II Region III 634,000 1,293,500 Lauderdale Corporation has a cost of capital of 8.6 percent.
Lauderdale Corporation is organized in three geographical divisions (regions) with managers responsible for revenues, costs, and assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance. Corporate overhead (all fixed) is allocated to the regions based on regional gross margin (regional revenue minus regional cost of sales). The following information is from Lauderdale's first year of operations: Region I $1,204,000 452,000 426,000 Region II $1,654,000 812,000 636,000 Region III $2,254,000 1,142,000 856,000 Total Corporation $5,112,000 2,400,000 1,918,000 440,000 Revenues Cost of sales Selling, General and Administrative (all fixed) Corporate overhead Information on the division assets in the three regions of Lauderdale Corporation follows: $ 704,000 Region I Region II Region III 634,000 1,293,500 Lauderdale Corporation has a cost of capital of 8.6 percent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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