IBM has three divisions: Hardware, Software, and Services. The following information is provided:
•Hardware: Sales $1,200,000, Variable Costs $800,000, Fixed Costs $200,000
•Software: Sales $900,000, Variable Costs $400,000, Fixed Costs $150,000
•Services: Sales $600,000, Variable Costs $300,000, Fixed Costs $100,000
Required:
1.Prepare a responsibility report for each division.
2.Evaluate the performance of each division.
3.Discuss how responsibility accounting can be used to improve divisional performance.