Please Answer Q 1 & 2 ...

Chapter 12 Responsibility Accounting, Investment Centres, and Transfer Pricing 505 Problem 12-56 Show-Off, Inc. sells merchandise through three retail outlets--in Vancouver, Toronto, and Montreal- Segmented Income and operates a general corporate headquarters in Toronto. A review of the company's income state Statement: Responsibility ment indicates a record year in terms of sales and profits. Management, though, desires additional Accounting insights about the individual stores and has asked that Judson Wyatt, a newly hired intern, prepare a segmented income statement. The following information has been extracted from Show-off's accounting records: The sales volume, sales price, and purchase price data are: Vancouver Toronto Montreal Sales volume 37,000 units 41.000 units 46,000 units Unit selling price $18.00 $16.50 $14.25 Unit purchase price 8.25 8.25 9.00 The following expenses were incurred for sales commissions, local advertising, property taxes, management salaries, and other noncontrollable (but traceable) costs: Vancouver Toronto Montreal Sales commissions 6% 6% 6% Local advertising $16,500 $33.000 $72,000 Local property taxes 6.750 3.000 9,000 Sales manager salary 48,000 Store manager salaries 46.500 58500 57,000 Other noncontrollable costs 8,700 6.900 26.700 Local advertising decisions are made at the store manager level. The sales manager's salary in Montreal is determined by the Montreal store manager, in contrast, store manager salaries are set by Show-Off's vice-president. Nontraceable fixed corporate expenses total $288.450. The company uses a responsibility accounting system. Required: 1. Assume the role of Judson Wyatt and prepare a segmented income statement for Show-off. 2. Determine the weakest-performing store and present an analysis of the probable causes of poor performance