GIVEN: Scranton Company has three operating segments.The managers of each segment have decision-making authority regarding pricing, cost control and asset investment.The following information is available for the three segments for the third quarter of 2014:

Alpha

Beta

Delta

Revenues

$790,000

$1,245,000

$990,000

Operating Expenses

$560,000

$960,000

$700,000

Invested Assets

$1,600,000

$2,000,000

$2,080,000

Number of Transactions

120,000

150,000

130,000

Desired Minimum ROI

12.0%

12.0%

12.0%

The company has a centralized accounting system.For financial reporting purposes, accounting department costs and common corporate costs are allocated to the segments as follows:

Accounting Department(number of transactions)

$60,000

Corporate Headquarters' Costs (per revenue dollar)

$810,000

REQUIRED:

Part 1:Prepare a report showing the operating incomes of the three segments for performance evaluate purposes.

Part 2:Identify the most successful segment according to each of the following measurements:(Show supporting calculations.)

Segment profit margin

Segment return on investment

Segment residual income

Part 3:Which of the measurements in Part 2 would you recommend for comparing the performance of the segments?Why?