County Cable Services Inc.is organized in three segments: Metro,Suburban,and Outlying.Data for the company and for these segments follow.
A.

A.Complete the segmented income statement for County Cable.
B.Evaluate the three segment managers for consideration of a pay raise.Base the managers' performance on (1)absolute dollars of the appropriate profit measure,and (2)the appropriate profit measure as a percentage of service revenue.What causes any difference in rankings between the two approaches?
B.The most appropriate performance measure is controllable profit margin,which is consistent with responsibility accounting.The rankings are:

The difference in rankings between the two approaches is caused by the fact that Suburban has a slightly lower rate of variable cost incurrence than Metro (18.75% vs.20%).Notice that controllable fixed costs expressed as a percentage of sales are the same for both segments (40%).

Question

County Cable Services Inc.is organized in three segments: Metro,Suburban,and Outlying.Data for the company and for these segments follow.
A.
  
A.Complete the segmented income statement for County Cable.
B.Evaluate the three segment managers for consideration of a pay raise.Base the managers' performance on (1)absolute dollars of the appropriate profit measure,and (2)the appropriate profit measure as a percentage of service revenue.What causes any difference in rankings between the two approaches?
B.The most appropriate performance measure is controllable profit margin,which is consistent with responsibility accounting.The rankings are:
  
The difference in rankings between the two approaches is caused by the fact that Suburban has a slightly lower rate of variable cost incurrence than Metro (18.75% vs.20%).Notice that controllable fixed costs expressed as a percentage of sales are the same for both segments (40%).

Quizplus · Accepted Answer

The Answer of County Cable Services Inc.is organized in three segments: Metro,Suburban,and Outlying.Data for the company and for these segments follow.
A.
  
A.Complete the segmented income statement for County Cable.
B.Evaluate the three segment managers for consideration of a pay raise.Base the managers' performance on (1)absolute dollars of the appropriate profit measure,and (2)the appropriate profit measure as a percentage of service revenue.What causes any difference in rankings between the two approaches?
B.The most appropriate performance measure is controllable profit margin,which is consistent with responsibility accounting.The rankings are:
  
The difference in rankings between the two approaches is caused by the fact that Suburban has a slightly lower rate of variable cost incurrence than Metro (18.75% vs.20%).Notice that controllable fixed costs expressed as a percentage of sales are the same for both segments (40%).