The Sports Equipment Division of Harrington Company is operated as a profit cent

Question

The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2014 at $902,950. The only variable costs budgeted for the division were cost of goods sold ($439,340) and selling and administrative ($60,380). Fixed costs were budgeted at $104,360 for cost of goods sold, $91,600 for selling and administrative, and $70,970 for noncontrollable fixed costs. Actual results for these items were:

Sales $886,130 Cost of goods sold Variable Fixed 417,640 107,950 Selling and administrative Variable Fixed 60,400 73,240 93,550 Noncontrollable fixed

Explanation / Answer

Responsibility Report for Sports and Equipment Division

For the Year ended 2014

Difference

Favourable-F

UnFavourable-U

Budget Actual

Difference

Favourable-F

UnFavourable-U

Sales $9,02,950 $8,86,130 $16,820 U Variable Cost Cost of goods sold $4,39,340 $4,17,640 $21,700 F Selling & Administrative $60,380 $60,400 $20 U Total $4,99,720 $4,78,040 $21.680 F Contribution Margin $4,03,230 $4,08,040 $4860 F Contrallable Fixed Cost Cost of Goods Sold $1,04,360 $1,07,950 $3,590 U Selling & Administrative $91,600 $73,240 $18,360 F Total Controllable Fixed Cost $1,95,960 $1,81,190 $14,770 F Controllable Margin $2,07,270 $2,26,850 $19,580 F

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