UrLink Company is a newly formed company specializing in high-speed Internet service for homes and businesses. The owner, Lenny Kirkland, divided the company into two segments: Home Internet Service and Business Internet Service. Each segment is run by its own supervisor, while basic selling and administrative services are shared by both segments. Lenny 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 Internet Service segment for the first quarter of 2022.

Instructions

a. Prepare a responsibility report for the first quarter of 2022 for the Home Internet Service segment.
b. Write a memo to Lenny Kirkland discussing the principles that should be used when preparing performance reports.

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Service revenue Allocated portion of: Building depreciation Advertising Billing Property taxes Material and supplies Supervisory salaries Insurance Wages Gas and oil Equipment depreciation Budget Actual $25,000 $26,200 11,000 11,000 5,000 4,200 3,500 3,000 1,200 1,000 1,600 1,200 9,000 9,500 4,000 3,900 3,000 3,250 2,800 3,400 1,500 1,300