Question: Panda Airlines Inc has two divisions organized as profit centers

Panda Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared:

The service department charge rate for the service department costs was based on revenues.
The following additional information is available:

a. Does the income from operations for the two divisions accurately measure performance?
b. Correct the divisional income statements, using the activity bases provided on the preceding page in revising the service departmentcharges.

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  • CreatedFebruary 04, 2014
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