Profit Center Responsibility Reporting for a Service CompanyThomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions, as profit centers.The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of revenues.The following quarterly income and expense accounts were provided from the trial balance as of December 31:Revenues—N Region $3,780,000Revenues—S Region 5,673,000Revenues—W Region 5,130,000Operating Expenses—N Region 2,678,500Operating Expenses—S Region 4,494,890Operating Expenses—W Region 3,770,050Corporate Expenses—Dispatching 182,000Corporate Expenses—Equipment Management 1,200,000Corporate Expenses—Treasurer's 734,000General Corporate Officers' Salaries 1,380,000The company operates three service departments: the Dispatching Department, the Equipment Management Department,and the Treasurer's Department. The Dispatching Department manages the scheduling and releasing of completed trains.The Equipment Management Department manages the railroad cars inventories. It makes sure the right freight cars are atthe right place at the right time. The Treasurer's Department conducts a variety of services for the company as a whole.The following additional information has been gathered:North South WestNumber of scheduled trains 650 1,105 845Number of railroad cars in inventory 6,000 8,400 9,600Required:1. Prepare quarterly income statements showing income from operations for the three regions. Use three columnheadings: North, South, and West. Round your interim calculations to three decimal places, if required
Profit Center Responsibility Reporting for a Service Company
Thomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions, as profit centers.
The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of revenues.
The following quarterly income and expense accounts were provided from the
Revenues—N Region $3,780,000
Revenues—S Region 5,673,000
Revenues—W Region 5,130,000
Operating Expenses—N Region 2,678,500
Operating Expenses—S Region 4,494,890
Operating Expenses—W Region 3,770,050
Corporate Expenses—Dispatching 182,000
Corporate Expenses—Equipment Management 1,200,000
Corporate Expenses—Treasurer's 734,000
General Corporate Officers' Salaries 1,380,000
The company operates three service departments: the Dispatching Department, the Equipment Management Department,
and the Treasurer's Department. The Dispatching Department manages the scheduling and releasing of completed trains.
The Equipment Management Department manages the railroad cars inventories. It makes sure the right freight cars are at
the right place at the right time. The Treasurer's Department conducts a variety of services for the company as a whole.
The following additional information has been gathered:
North South West
Number of scheduled trains 650 1,105 845
Number of railroad cars in inventory 6,000 8,400 9,600
Required:
1. Prepare quarterly income statements showing income from operations for the three regions. Use three column
headings: North, South, and West. Round your interim calculations to three decimal places, if required
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