The Trenshaw Transportation Company uses a responsibility reporting system to me

Question

The Trenshaw 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 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.


Planes Taxis Limos
Service revenue $xxxx $500,000 $xxxx
Variable costs $5,500,000 $xxxx $320,000
Contribution margin $xxxx $200,000 $480,000
Controllable fixed costs 1,500,000 $xxxx $xxxx
Controllable margin $xxxx $80,000 $240,000
Average operating assets 25,000,000 $xxxx $1,600,000
Return on investment 12% 10% x%

Explanation / Answer

Service revenue $10,000,000|$500,000| $800,000
Variable costs $5,500,000| $300,000| $320,000
Contribution margin $4,500,000 |$200,000| $480,000
Controllable fixed costs 1,500,000| $120,000 |$240,000
Controllable margin $3,000,000 |$80,000 |$240,000
Average operating assets 25,000,000 |$800,000 |$1,600,000
Return on investment 12% |10% |15%

Sevice revenue - variable cost = contribution margin

Contribution margin - controllable fixed cost = controllable margin

Return on investment = controllable margin / average operating assets

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.