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 Region II 451,500 424,500 $ 1,653,000 811,500 634,500 Region III $ 2,253,000 1,141,500 854,500 Total Corporation $ 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. Region I Region II Region III Divisional income
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 Region II 451,500 424,500 $ 1,653,000 811,500 634,500 Region III $ 2,253,000 1,141,500 854,500 Total Corporation $ 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. Region I Region II Region III Divisional income
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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