Carry On Freight Inc. has three regional divisions organized 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, 20Y3. Revenues—Air Division $ 935,800 Revenues—Rail Division 1,110,300 Revenues—Truck Division 2,025,500 Operating Expenses—Air Division 593,000 Operating Expenses—Rail Division 660,800 Operating Expenses—Truck Division 1,224,900 Corporate Expenses—Shareholder Relations 142,300 Corporate Expenses—Customer Support 517,500 Corporate Expenses—Legal 180,000 General Corporate Officers' Salaries 314,300 The company operates three service departments: Shareholder Relations, Customer Support, and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company. The Customer Support Department is the company's point of contact for new service, complaints, and requests for repair. The department believes that the number of customer contacts is an activity base for this work. The Legal Department provides legal services for division management. The department believes that the number of hours billed is an activity base for this work. The following additional information has been gathered: Air Rail Truck Number of customer contacts 5,200 6,200 9,300 Number of hours billed 1,100 1,800 1,600 Division management does not control activities related to the shareholder relations department and general corporate officers' salaries. Required: 1. Prepare quarterly income statements showing operating income for the three divisions. Use three column headings: Air, Rail, and Truc

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 2PA: Profit center responsibility reporting for a service company Red Line Railroad Inc. has three...

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Carry On Freight Inc. has three regional divisions organized 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, 20Y3.

Revenues—Air Division	$ 935,800
Revenues—Rail Division	1,110,300
Revenues—Truck Division	2,025,500
Operating Expenses—Air Division	593,000
Operating Expenses—Rail Division	660,800
Operating Expenses—Truck Division	1,224,900
Corporate Expenses—Shareholder Relations	142,300
Corporate Expenses—Customer Support	517,500
Corporate Expenses—Legal	180,000
General Corporate Officers' Salaries	314,300

The company operates three service departments: Shareholder Relations, Customer Support, and Legal. The Shareholder Relations Department conducts a variety of services for shareholders of the company. The Customer Support Department is the company's point of contact for new service, complaints, and requests for repair. The department believes that the number of customer contacts is an activity base for this work. The Legal Department provides legal services for division management. The department believes that the number of hours billed is an activity base for this work. The following additional information has been gathered:

	Air	Rail	Truck
Number of customer contacts	5,200		6,200	9,300
Number of hours billed	1,100		1,800	1,600

Division management does not control activities related to the shareholder relations department and general corporate officers' salaries.

Required:

1. Prepare quarterly income statements showing operating income for the three divisions. Use three column headings: Air, Rail, and Truck.

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