of McKenzie Co. is operated as a profit center. Sales for the division were budg
ID: 2393286 • Letter: O
Question
of McKenzie Co. is operated as a profit center. Sales for the division were budgeted for 2013 at $1,250,000. The only were cost of goods sold (5610,000) and selling and administrative (580,000) Fixed costs were budgeted at $130,000 for cost of goods costs budgeted for the sold, $120,000 for selling and administrative and $95,000 for noncontrollable fixed costs. Actual results for these items were $1,175,000 Cost of Goods Sold 545,000 140.000 xed Variable $100,000 Noncontrollable fixed $105,000 t for the Real Estate Products Division for 2013. (b) Assume the division is an investment center, and average operating assets were $1,200,000 ROIExplanation / Answer
a.)
b.) Return on investment (ROI) = controllable margin / Average operating assets
= $308000 / $1200000
= 25.67%
Budgeted Actual Difference sales 1250000 1175000 75000 Unfavorable Variable costs : cost of goods sold 610000 545000 65000 favorable selling and administrative 80000 82000 2000 unfavorable Total variable cost 690000 627000 63000 favorable Contribution margin 560000 548000 12000 unfavorable Fixed costs: cost of goods sold 130000 140000 10000 unfavorable selling and administrative 120000 100000 20000 favorable Total fixedcosts 250000 240000 10000 favorable Controllable margin 310000 308000 2000 unfavorableRelated Questions
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