Question

Thomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions,...

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 trial balance as of December 31:

Revenues—N Region $938,000
Revenues—S Region 1,117,900
Revenues—W Region 1,945,600
Operating Expenses—N Region 594,400
Operating Expenses—S Region 665,300
Operating Expenses—W Region 1,176,600
Corporate Expenses—Dispatching 459,800
Corporate Expenses—Equipment Management 228,000
Corporate Expenses—Treasurer’s 142,700
General Corporate Officers’ Salaries 315,000

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 5,200 6,300 9,400
Number of railroad cars in inventory 1,000 1,500 1,300

Required:

1. Prepare quarterly income statements showing income from operations for the three regions. Use three column headings: North, South, and West. Do not round your interim calculations.

Thomas Railroad Company
Divisional Income Statements
For the Quarter Ended December 31
North South West
Revenues $ $ $
Operating expenses
Income from operations before service department charges $ $ $
Service department charges:
Dispatching $ $ $
Equipment Management
Total service department charges $ $ $
Income from operations $ $ $

Feedback

2. What is the profit margin of each division? Round to one decimal place.

Region Profit Margin
North Region %
South Region %
West Region %

Homework Answers

Answer #1

Solution 1:

Thomas Railroad Company
Divisional Income Statements
For the Quarter Ended December 31
Particulars North South West
Revenues $938,000.00 $1,117,900.00 $1,945,600.00
Operating expenses $594,400.00 $665,300.00 $1,176,600.00
Income from operations before service department charges $343,600.00 $452,600.00 $769,000.00
Service department charges:
Dispatching (52:63:94) $114,400.00 $138,600.00 $206,800.00
Equipment Management (10:15:13) $60,000.00 $90,000.00 $78,000.00
Total service department charges $174,400.00 $228,600.00 $284,800.00
Income from operations $169,200.00 $224,000.00 $484,200.00

Solution 2:

Profit margin = Income from operationg / Revenues

North Region = $169,200 / $938,000 = 18.0%

South region = $224,000 / $1,117,900 = 20.0%

West region = $484,200 / $1,945,600 = 24.9%

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Thomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions,...
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 operating income 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 $942,100 Revenues—S Region 1,115,000 Revenues—W Region 1,983,800 Operating Expenses—N Region 597,000 Operating Expenses—S Region 663,600 Operating Expenses—W Region 1,199,700 Corporate Expenses—Dispatching 472,800 Corporate Expenses—Equipment Management 220,800...
Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer...
Red Line Railroad Inc. has three regional divisions organized 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—East $ 884,000 Revenues—West 1,050,000 Revenues—Central 1,870,000 Operating Expenses—East 568,100 Operating Expenses—West 623,520 Operating Expenses—Central 1,170,540 Corporate Expenses—Shareholder Relations 157,000 Corporate Expenses—Customer Support 407,000 Corporate Expenses—Legal 261,000 General Corporate Officers’ Salaries 270,750 The company...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $1,238,400 Purchasing Department 223,500 Other corporate administrative expenses 629,000 Total corporate expense $2,090,900 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $516,000 Purchasing Department 89,600 Other corporate administrative expenses 560,000 Total corporate expense $1,165,600 The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $516,000 Purchasing Department 89,600 Other corporate administrative expenses 560,000 Total corporate expense $1,165,600 The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on...
Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and...
Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $475,600 Purchasing Department 66,000 Other corporate administrative expenses 580,000 Total corporate expense $1,121,600 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department,...
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and...
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $ 492,000 Purchasing Department 75,600 Other corporate administrative expenses 575,000 Total corporate expense $1,142,600 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format segmented income statement as shown: Total Company North South Sales $ 937,500 $ 750,000 $ 187,500 Variable expenses 637,500 600,000 37,500 Contribution margin 300,000 150,000 150,000 Traceable fixed expenses 146,000 73,000 73,000 Segment margin 154,000 $ 77,000 $ 77,000 Common fixed expenses 64,000 Net operating income $ 90,000 Required: 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format segmented income statement as shown: Total Company North South Sales $ 800,000 $ 600,000 $ 200,000 Variable expenses 560,000 480,000 80,000 Contribution margin 240,000 120,000 120,000 Traceable fixed expenses 126,000 63,000 63,000 Segment margin 114,000 $ 57,000 $ 57,000 Common fixed expenses 54,000 Net operating income $ 60,000 Required: 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format segmented income statement as shown: Total Company North South Sales $ 800,000 $ 600,000 $ 200,000 Variable expenses 560,000 480,000 80,000 Contribution margin 240,000 120,000 120,000 Traceable fixed expenses 144,000 72,000 72,000 Segment margin 96,000 $ 48,000 $ 48,000 Common fixed expenses 63,000 Net operating income $ 33,000 Required: 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT