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County Cable Services Inc. is organized in three segments: Metro, Suburban, and Outlying. Data for the company and for these segments follow.
Variable costs as a percentage of service revenue are: Metro, 20%; Suburban, 18.75%; and Outlying, 25%.
Required:
A. Complete the segmented income statement for County Cable.
B. Evaluate the three segment managers for consideration of a pay raise. Base the managers' performance on (1) absolute dollars of the appropriate profit measure, and (2) the appropriate profit measure as a percentage of service revenue. What causes any difference in rankings between the two approaches?
Imperfect Competitor
An entity in a market that does not hold enough power to dictate the conditions of the market but can influence the price and output of its goods to some extent.
MRP
Marginal Revenue Product, the additional revenue generated from employing one more unit of a factor of production.
Unit of Input
The smallest measure of an input (like labour, materials) used in the production of goods or services.
Complementary Resources
Assets or inputs that are used together with another resource to produce a good or service, enhancing each other's value in the process.
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