Chapter 10, Problem 10.11E

UrLink Company is a newly formed company specializing in high-speed Internet service for home and business. The owner, Lenny Kirkland, had divided the company into two segments: Home Internet Service and Business Internet Service. Each segment is run by its own supervisor, while basic selling and administrative services are shared by both segments.

Lenny has asked you to help him create a performance reporting system that will allow him to measure each segment's performance in terms of its profitability. To that end. the following information has been collected on the Home Internet Service segment for the first quarter of 2017.

	Budget	Actual
Service revenue	$25,000	$26,200
Allocated portion or: Building depreciation	11,000	11,000
Advertising	5,000	4,200
Billing	3,500	3,000
Property taxes	1,200	1,000
Material and supplies	1,600	1,200
Supervisory salaries	9,000	9,500
Insurance	4,000	3,900
Wages	3,000	3,250
Gas and oil	2,800	3,400
Equipment depreciation	1,500	1,300

Instructions

(a) Prepare a responsibility report for the first quarter of 2017 for the Home internet Service segment.

(b) - Write a memo to Lenny Kirkland discussing the principles that should be used when preparing performance reports.