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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: Revenues Cost of sales Selling, General and Administrative (all fixed) Corporate overhead Region I $ 1,202,000 451,000 423,000 Region 11 $ 1,652,000 811,000 633,000 Required: a. Compute divisional operating income for the three regions. Ignore taxes. b. How have these regions performed? Region 111 $ 2,252,000 1,141,000 853,000 Total Corporation. $ 5,106,000 2,403,000 1,909,000 436,000

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: Revenues Cost of sales Selling, General and Administrative (all fixed) Corporate overhead Region I $ 1,202,000 451,000 423,000 Region 11 $ 1,652,000 811,000 633,000 Required: a. Compute divisional operating income for the three regions. Ignore taxes. b. How have these regions performed? Region 111 $ 2,252,000 1,141,000 853,000 Total Corporation. $ 5,106,000 2,403,000 1,909,000 436,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: Revenues Cost of sales Selling, General and Administrative (all fixed) Corporate overhead Region I $ 1,202,000. 451,000 423,000 Required: a. Compute divisional operating income for the three regions. Ignore taxes. b. How have these regions performed? Region II $1,652,000 811,000 633,000 Complete this question by entering your answers in the tabs below. Divisional income Region I S 206,889 Required A Required B Compute divisional operating income for the three regions. Ignore taxes. Note: Do not round the "Overhead rate" value. Round your final answers to the nearest whole dollar amount. Region II Region III Region III $ 2,252,000 1,141,000 853,000 Required B > Total Corporation $ 5,106,000 2,403,000 1,909,000 436,000
Transcribed Image Text: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: Revenues Cost of sales Selling, General and Administrative (all fixed) Corporate overhead Region I $ 1,202,000. 451,000 423,000 Required: a. Compute divisional operating income for the three regions. Ignore taxes. b. How have these regions performed? Region II $1,652,000 811,000 633,000 Complete this question by entering your answers in the tabs below. Divisional income Region I S 206,889 Required A Required B Compute divisional operating income for the three regions. Ignore taxes. Note: Do not round the "Overhead rate" value. Round your final answers to the nearest whole dollar amount. Region II Region III Region III $ 2,252,000 1,141,000 853,000 Required B > Total Corporation $ 5,106,000 2,403,000 1,909,000 436,000
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