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 $1,215,000 457,500 442,500 Region II $ 1,665,000 817,500 652,500 Required: 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. Region III $ 2,265,000 1,147,500 872,500 Total Corporation. $5,145,000 2,422,500 1,967,500 462,000
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 $1,215,000 457,500 442,500 Region II $ 1,665,000 817,500 652,500 Required: 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. Region III $ 2,265,000 1,147,500 872,500 Total Corporation. $5,145,000 2,422,500 1,967,500 462,000
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter24: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 8E: Rocky Mountain Airlines Inc. has two divisions organized as profit centers, the Passenger Division...
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