Question

The Ferrell Transportation Company uses a responsibility reporting system to measure the performance of its three investment centers: Planes, Taxis, and Limos. Segment performance is measured using a system of responsibility reports and return on investment calculations. The allocation of resources within the company and the segment managers’ bonuses are based in part on the results shown in these reports.

Recently, the company was the victim of a computer virus that deleted portions of the company’s accounting records. This was discovered when the current period’s responsibility reports were being prepared. The printout of the actual operating results appeared as follows.

Determine the missing pieces of information below. (Round intermediate calculations and final answers to 0 decimal places, e.g. 1,255.)

		Planes			Taxis			Limos
Service revenue		$			$498,500			$
Variable costs		5,502,400						297,900
Contribution margin					250,900			522,340
Controllable fixed costs		1,499,600
Controllable margin					83,000			277,740
Average operating assets		24,960,500						1,543,000
Return on investment		13	%		7	%			%

Answer 1

Determine the missing pieces of information below. (Round intermediate calculations and final answers to 0 decimal places, e.g. 1,255.)

		Planes			Taxis			Limos
Service revenue		$10246865			$498,500			$820240
Variable costs		5,502,400			498500-250900 = 247600			297,900
Contribution margin		4744465			250,900			522,340
Controllable fixed costs		1,499,600			250900-83000 = 167900			244600
Controllable margin		24960500*13% = 3244865			83,000			277,740
Average operating assets		24,960,500			83000*100/7 = 1185714			1,543,000
Return on investment		13	%		7	%		18	%