2012 Budget Actual The Sports Equipment Division of Bob Gibson Company is operat

Question

2012

Budget

Actual

The Sports Equipment Division of Bob Gibson Company is operated as a profit center. Sales for the division were budgeted for 2012 at $899,674. The only variable costs budgeted for the division were cost of goods sold ($440,199) and selling and administrative ($59,248). Fixed costs were budgeted at $100,788 for cost of goods sold, $90,331 for selling and administrative and $69,258 for noncontrollable fixed costs. Actual results for these items were:  
Sales $879,542
Cost of goods sold

    Variable 408,790
    Fixed 104,591
Selling and administrative
    Variable 61,676     Fixed 66,311 Noncontrollable fixed 79,780
The Sports Equipment Division of Bob Gibson Company is operated as a profit center. Sales for the division were budgeted for 2012 at $899,674. The only variable costs budgeted for the division were cost of goods sold ($440,199) and selling and administrative ($59,248). Fixed costs were budgeted at $100,788 for cost of goods sold, $90,331 for selling and administrative and $69,258 for noncontrollable fixed costs. Actual results for these items were:

Explanation / Answer

Assume the division is an investment center, and average operating assets were $1,106,500. Compute ROI.

ROI = (238174-79780)/1106500 =0.1431 or 14.31%

Complete the responsibility report for the Sports Equipment Division for 2012. BOB GIBSON COMPANY Sports Equipment Division Responsibility Report 2012
Budget Actual Difference Sales $                            889,674 $      879,542 $ 10,132 Unfavorable Variable costs



Cost of goods sold $                            440,199 $      408,790 $ 31,409 Favorable Selling and administrative $                              59,248 $         61,676 $    2,428 Unfavorable Total $                            499,447 $      470,466 $ 28,981 Favorable Contribution margin $                            390,227 $      409,076 $ 18,849 Favorable Controllable fixed costs



Cost of goods sold $                            100,788 $      104,591 $    3,803 Unfavorable Selling and administrative $                              90,331 $         66,311 $ 24,020 Favorable Total $                            191,119 $      170,902 $ 20,217 Favorable Controllable margin



$                            199,108 $      238,174 $ 39,066 Favorable

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