Solution-Define decentralisation and segment reporting

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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Define decentralisation and segment reporting

Reference no: EM13498430

Reference no: EM13498430

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