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 Region 11 Region III Region I $ 1,213,000 456,500 439,500 $713,000 643,000 1,307,000 Region III $1,663,000 816,500 649,500 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: Region III $ 2,263,000 1,146,500 869,500 Required: a. Compute the division ROI for each of the three regions. b. How have these regions performed? Total Corporation $5,139,000 2,419,500 1,958,500 458,000 Complete this question by entering your answers in the tabs below.

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 Region 11 Region III Region I $ 1,213,000 456,500 439,500 $713,000 643,000 1,307,000 Region III $1,663,000 816,500 649,500 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: Region III $ 2,263,000 1,146,500 869,500 Required: a. Compute the division ROI for each of the three regions. b. How have these regions performed? Total Corporation $5,139,000 2,419,500 1,958,500 458,000 Complete this question by entering your answers in the tabs below.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 2PA: Profit center responsibility reporting for a service company Red Line Railroad Inc. has three...

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Service department charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of 64,560, and the Purchasing Department had expenses of 40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: A. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. B. Using the cost driver information in (A), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. C. Why does the Residential Division have a larger support department allocation than the other two divisions, even though its sales are lower?
Profit center responsibility reporting for a service company Red Line Railroad Inc. has three regional divisions organized 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: The company operates three support 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 companys point of contact for new service, complaints, and requests for repair. The department believes that the number of customer contacts is a cost driver for this work. The Legal Department provides legal services for division management. The department believes that the number of hours billed is a cost driver for this work. The following additional information has been gathered: Instructions 1. Prepare quarterly income statements showing operating income for the three divisions. Use three column headings: East, West, and Central. 2. Identify the most successful division according to the profit margin. Round to the nearest whole percent. 3. Provide a recommendation to the CEO for a better method for evaluating the performance of the divisions. In your recommendation, identify the major weakness of the present method.
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 Region II $ 1,202,000 $1,652,000 451,000 811,000 1,141,000 633,000 853,000 423,000 Region I $ 702,000 Region II 632,000 Region III1,290,500 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: Region III Total Corporation $2,252,000 $ 5,106,000 2,403,000 1,909,000 436,000 Lauderdale Corporation has a cost of capital of 8.6 percent. Required: a. Compute residual income for the three…
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 Region II Region III Total Corporation Revenues $ 1,202,000 $ 1,652,000 $ 2,252,000 $ 5,106,000 Cost of sales 451,000 811,000 1,141,000 2,403,000 Selling, General and Administrative (all fixed) 423,000 633,000 853,000 1,909,000 Corporate overhead 436,000 Information on the division assets in the three regions of Lauderdale Corporation follows: Region I $ 702,000 Region II 632,000 Region III 1,290,500 Lauderdale Corporation has a cost of capital of 8.6 percent. Required: Compute…
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 $ 1,200,000 450,000 420,000 Required A Required B Region II $ 1,650,000 810,000 630,000 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: Region I $ 700,000 Region II Region III 630,000 1,287,500 Lauderdale Corporation has a cost of capital of 8.6 percent. Required: a. Compute residual income for the three regions. Ignore taxes. b. How have these regions performed? Complete this…
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 Region II Region III Total Corporation Revenues $ 1,206,000 $ 1,656,000 $ 2,256,000 $ 5,118,000 Cost of sales 453,000 813,000 1,143,000 2,409,000 Selling, General and Administrative (all fixed) 429,000 639,000 859,000 1,927,000 Corporate overhead 444,000 Information on the division assets in the three regions of Lauderdale Corporation follows: Region I $ 706,000 Region II 636,000 Region III 1,296,500 Required: Compute the division ROI for each of the three regions. How have…
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 Region II Region III Total Corporation Revenues $ 1,200,000 $ 1,650,000 $ 2,250,000 $ 5,100,000 Cost of sales 450,000 810,000 1,140,000 2,400,000 Selling, General and Administrative (all fixed) 420,000 630,000 850,000 1,900,000 Corporate overhead 432,000 Required: Compute divisional operating income for the three regions. Ignore taxes. How have these regions performed?
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 Region II Region III Total Corporation Revenues $ 1,200,000 $ 1,650,000 $ 2,250,000 $ 5,100,000 Cost of sales 450,000 810,000 1,140,000 2,400,000 Selling, General and Administrative (all fixed) 420,000 630,000 850,000 1,900,000 Corporate overhead 432,000 Information on the division assets in the three regions of Lauderdale Corporation follows: Region I $ 700,000 Region II 630,000 Region III 1,287,500 Lauderdale Corporation has a cost of capital of 8.6 percent. Required: Compute…
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