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 Required: Region I $ 1,203,000 451,500 Region II $ 1,653,000 811,500 Region III Total Corporation 424,500 634,500 $ 2,253,000 1,141,500 854,500 $ 5,109,000 2,404,500 1,913,500 a. Compute divisional operating income for the three regions. Ignore taxes. b. How have these regions performed? Complete this question by entering your answers in the tabs below. 438,000 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. Divisional income Region I Region II Region III
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 Required: Region I $ 1,203,000 451,500 Region II $ 1,653,000 811,500 Region III Total Corporation 424,500 634,500 $ 2,253,000 1,141,500 854,500 $ 5,109,000 2,404,500 1,913,500 a. Compute divisional operating income for the three regions. Ignore taxes. b. How have these regions performed? Complete this question by entering your answers in the tabs below. 438,000 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. Divisional income Region I Region II Region III
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
am.103.
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
Required:
Region I
$ 1,203,000
451,500
Region II
$ 1,653,000
811,500
Region III
Total
Corporation
424,500
634,500
$ 2,253,000
1,141,500
854,500
$ 5,109,000
2,404,500
1,913,500
a. Compute divisional operating income for the three regions. Ignore taxes.
b. How have these regions performed?
Complete this question by entering your answers in the tabs below.
438,000
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.
Divisional income
Region I
Region II
Region III
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