Exercise 22-16 (Part Level Submission) The Sports Equipment Division of Harringt

Question

Exercise 22-16 (Part Level Submission) The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $901,940. The only variable costs budgeted for the division were cost of goods sold ($442,500) and selling and administrative ($62,010). Fixed costs were budgeted at $100,690 for cost of goods sold, $92,550 for selling and administrative, and $72,700 for noncontrollable fixed costs. Actual results for these items were: Sales $885,840 Cost of goods sold 418,450 106,780 Variable Fixed Selling and administrative Variable Fixed 64,440 71,750 89,660 Noncontrollable fixed

Explanation / Answer

HARRINGTON COMPANY Sports equipment division Responsibility Report 2017 Budget Actual Difference Sales $ 901,940 $ 885,840 $     16,100 U Less: Variable cost Cost of goods sold $ 442,500 $ 418,450 $     24,050 F Selling and administrative $    62,010 $    64,440 $       2,430 U Total variable cost $ 504,510 $ 482,890 $     21,620 F Contribution margin $ 397,430 $ 402,950 $       5,520 F Less:Controllable direct fixed cost Cost of goods sold $ 100,690 $ 106,780 $       6,090 U Selling and administrative $    92,550 $    71,750 $     20,800 F Total controllable direct fixed cost $ 193,240 $ 178,530 $     14,710 F Controllable margin $ 204,190 $ 224,420 $     20,230 F

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