Question

s Redline Renter CEO ate ne performanc flowing quarterly come and e or presten The o ficer from aproape of the were provided from the balances of December departe S .000 RES Operating expenses Theorem aperiams before Service department charge C ar por Lap Total service department charges Income from operations Compete n ce Corporate s hareholder Relation 156,000 Frei Marmi Die Eat Di West Division Cat Disain General Corporate Sales 271,500 The com e s the service departments Shareholder Relation Customer Support, and legal The Starter Relation Departme n ts variety of services for shareholders of the company The me p arents the company point of contact for recomes, and for pow. The department believes that the number of customer consis tivity base for work. The Legal Department provides inge n for division management. The department believes that the number of house an y base for this work. The following additional Nowe g o The role maglie W ould you hude more on to Me CEO trabaho trong nepertree or dana! Warr e n reas of the presented A Number of customer contacts .000 1100 .000 2,000 9.000 2.640 Number of our Myn's cor ded for the new and located the need in the cand ronaldivertentified Here were. There who work wel L o gromne opreme Red Line R oad Inc Divisional com For the Quer Ended December 31

Answer 1

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Red Line Railroad Inc.
Calculation of activity based overhead rates
		A	B	C	D	E=B+C+D	F=A/E
			Estimated use of Cost Drivers
Activity	Cost Driver	Amount $	East	West	Central	Total	ABC Rates
Customer Support Expenses	No. of customer contacts	320,000.00	5,000.00	6,000.00	9,000.00	20,000.00	16.00
Legal Expenses	No. of hours billed	255,200.00	1,100.00	2,060.00	2,640.00	5,800.00	44.00
	Total Activity Cost	575,200.00
	See F	See B	G=F*B	See C	H=F*C	See D	I=F*D
Allocation table		East		West		Central
Activity	ABC Rates	Cost Drivers	Cost assigned	Cost Drivers	Cost assigned	Cost Drivers	Cost assigned
Customer Support Expenses	16.00	5,000.00	80,000.00	6,000.00	96,000.00	9,000.00	144,000.00
Legal Expenses	44.00	1,100.00	48,400.00	2,060.00	90,640.00	2,640.00	116,160.00
Total Cost assigned			128,400.00		186,640.00		260,160.00
Answer 1
Income Statement	East	West	Central
Revenues	866,000.00	1,030,000.00	1,890,000.00	J
Operating Expenses	565,700.00	627,360.00	1,170,060.00
Income from operations before service dept. charges	300,300.00	402,640.00	719,940.00
Less- Service dept. charges
Customer Support	80,000.00	96,000.00	144,000.00
Legal	48,400.00	90,640.00	116,160.00
Income from operations	171,900.00	216,000.00	459,780.00	K
Answer 2
Profit margin	19.85%	20.97%	24.33%	L=K/J
The most successful division according to profit margin is Central Division.
Answer 3
The assets invested in each division are not considered.
Answer 4
Considering residual income
Computing rate of return on investment.