Edington Plumbing Company is a newly formed company specializing in plumbing services for home and business. The owner, Steve Edington, had divided the company into two segments: Home Plumbing Services and Business Plumbing Services. Each segment is run by its own supervisor, while basic selling and administrative services are shared by both segments.

Steve has asked you to help him create a performance reporting system that will allow him to measure each segment's performance in terms of its profitability. To that end, the following information has been collected on the Home Plumbing Services segment for the first quarter of 2011.

Instructions

(a) Prepare a responsibility report for the first quarter of 2011 for the Home Plumbing Services segment.

(b) Write a memo to Steve Edington discussing the principles that should be used when preparing performance reports.

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Budgeted Actual $26,000 $25,000 Service revenue Allocated portion of Building depreciation 11,000 5,000 3,500 1,200 1,500 9,000 4,000 3,000 2,700 1,600 11,000 4,200 3,000 1,000 1,200 9,400 3,500 3,300 3.400 1,300 Advertising Billing Property taxes Material and supplies Supervisory salaries Insurance Wages Gas and oil Equipment depreciation