Define decentralisation and segment reporting

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Reference no: EM13498430

Decentralisation and Segment Reporting                  

Sparky Electrical Services is organised into three divisions: Metro, Suburban and Regional. The company uses a responsibility accounting system to evaluate the performance of its divisions and divisional managers. Data for the divisions for the last year were as follows:

 

 

Metro

Suburban

Regional

Service revenue

$950,000

$750,000

$350,000

Variable expenses

150,000

100,000

50,000

Fixed expenses controllable by divisional manager

350,000

270,000

100,000

Fixed expenses traceable to division but controllable by others

180,000

150,000

40,000

 

In addition to the expenses listed above, the company had $450,000 of common fixed expenses which it allocated to each division based on their percentage of total service revenue earned.

Required

Prepare a segmented income statement for Sparky Electrical Services that highlights the profitability/performance of the three divisions and the divisional managers.

 

Reference no: EM13498430

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