Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared:

The service department charge rate for the service department costs was based on revenues. Because the revenues of the two divisions were the same, the service department charges to each division were also the same.
The following additional information is available:

a. Does the income from operations for the two divisions accurately measure performance? Explain.
b. Correct the divisional income statements, using the activity bases provided in revising the service department charges.

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Wild Sun Airlines Inc Divisional Income Statements For the Year Ended December 31, 2016 Passenger Division Cargo Division $3,025,000 2,450,000 $3,025,000 2,736,000 Operating expenses Income from operations before service department charges 575,000 $289,000 Less service department charges: Training Flight scheduling Reservations $125,000 108,000 151,200 $125,000 108,000 151 384,200 190,800 384,200 $(95,200) Income from operations Passenger Cargo Number of personnel trained Number of flights Number of reservations requested Divlsion 350 800 20,000 DIvision 150 1,200 2,000 20,000