View the step-by-step solution to:

Bell Communications Company has three regional divisions organized as profit centers.

A.G. Bell Communications Company 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, 2006.
Revenues-Central Division $620,000
Revenues-Coastal Division $856,000
Revenues-Metro Division $1,180,000
Operating Expenses-Central Division $370,000
Operating Expenses-Coastal Division $495,700
Operating Expenses-Metro Division $675,200
Corporate Expenses-Shareholder Relations $65,000
Corporate Expenses-Customer Support $192,000
Corporate Expenses-Central Accounting $102,000
<b style="color:black;background-color:#ffff66">General Corporate Officers' Salaries</b> $190,000
The company operates three service departments: Shareholder Relations, Customer Support, and Central Accounting.
The Shareholder Relations Department conducts a variety of services for shareholders of the company.
The Customer Support Department is the company's telephone point of contact for new service, complaints and requests for repair.
The department believes that the number of customer calls is an active base for this work. The Central Accounting Department provides reports
for division management. The department believes that the number of reports is an active base for this work. The following additional information
has been gathered:
Central Coastal Metro
Number of customer calls 4,000 4,600 7,400
Number of accounting reports 800 1,400 1,200
Instructions
1. Prepare quarterly income statements showing income from operations for the three divisions.
Use three column headings: Central, Coastal, and Metro.
2. Identify the most successful division according to the profit margin. Round whole percentages to two decimal places.
3. Provide a recommendation to the CEO for a better method for evaluating the performance of the divisions.
In your recommendation, identify the major weakness of the present method.

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question