4750000 46250000 3750000 12500000 350000 1300000

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4,750,000 46,250,000 $ 3,750,000 12,500,000 350,000 1,300,000 900,000 140,000 600,000 1,900,000 17,690,000 $ 2,310,000 11,000,000 310,000 1,400,000 800,000 160,000 540,000 1,710,000 15,920,000 $ 2,080,000 8,500,000 190,000 1,200,000 1,100,000 150,000 360,000 1,140,000 12,640,000 $ (640,000) *Includes building rental expense for the Billings and Great Falls locations and building depreciation for the Clayton location. *Local administrative expenses are the administrative expenses incurred at the check processing centers. Regional administrative expenses are allocated to the check processing centers based on sales. Corporate administrative expenses are charged to segments of the company such as the Rocky Mountain Region and the check processing centers at the rate of 9.5% of their sales. Upon seeing this report, Ms. Romeros summoned John Littlebear for an explanation. Page 559 Romeros: What's the story on Clayton? It didn't have a loss the previous year did it? Littlebear: No, the Clayton facility has had a nice profit every year since it opened six years ago, but Clayton lost a big contract this year. Romeros: Why? Littlebear: One of our national competitors entered the local market and bid very aggressively on the contract. We couldn't afford to meet the bid. Clayton's costs particularly their facility expenses are just too high. When Clayton lost the contract, we had to lay off a lot of employees, but we could not reduce the fixed costs of the Clayton facility. Romeros: Why is Clayton's facility expense so high? It's a smaller facility than either
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Billings or Great Falls and yet its facility expense is higher. Littlebear: The problem is that we are able to rent suitable facilities very cheaply at Billings and Great Falls. No such facilities were available at Clayton; we had them built.
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  • Fall '19
  • Depreciation, Expense, Operating expense, Clayton Facility

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