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Gator Country Cable, Inc. is organized in three segments: Metro, Suburban, and Outlying. Data for...

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Accounting

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

Gator County Cable Inc Metro Subburban Outlying

Service revenue $ 0 $500 $400 $200

Less: Variable cost $ 225 0 0 0

Segment Contribution Margin 0 0 0 0

Less: Controllable fixed costs $ 0 $200 $160 $75

Controllable profit margin $440 $200 0 $75

Less: Noncontrollable fixed costs 0 0 $100 0

Segment profit margin $180 $85 0 $30

Less: Common fixed costs 0 0 0 0

Income before taxes 0 0 0 0

Less: Income tax expense $75 0 0 0

Net Income $55 0 0 0

Variable costs as a percentage of service revenue are: Metro, 20%; Suburban, 18.75%; and Outlying, 25.0%.

Required:

A. Complete the segmented income statement for Gator Country 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?

0

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