Exercise 24-11 UrLink Company is a newly formed company specializing in high-spe
ID: 2469219 • Letter: E
Question
Exercise 24-11
UrLink Company is a newly formed company specializing in high-speed Internet service for home and business. The owner, Lenny Kirkland, had divided the company into two segments: Home Internet Service and Business Internet Service. Each segment is run by its own supervisor, while basic selling and administrative services are shared by both segments.
Lenny has asked you to help him create a performance reporting system that will allow him to measure each segment’s performance in terms of its profitability. To that end, the following information has been collected on the Home Internet Service segment for the first quarter of 2017.
Budgeted
Actual
Service revenue $ 26,000 $ 25,700
Allocated portion of:
Building depreciation 10,300 10,300
Advertising 4,900 4,600
Billing 3,300 3,100
Property taxes 1,100 1,100
Material and supplies 1,700 1,000
Supervisory salaries 8,700 9,600
Insurance 4,100 3,400
Wages 3,300 3,000
Gas and oil 2,500 3,500
Equipment depreciation 1,600 1,400
Prepare a responsibility report for the first quarter of 2017 for the Home Internet Service segment.
URLINK COMPANY
Home Internet Services Segment
Responsibility Report
For the Quarter Ended March 31, 2017
Difference
Budget
Actual
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
Controllable Margin
Contribution Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
$
$
$
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Contribution Margin
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Contribution Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Favorable
Neither Favorable nor Unfavorable
Unfavorable
Contribution Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Neither Favorable nor Unfavorable
Favorable
Unfavorable
Contribution Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Unfavorable
Neither Favorable nor Unfavorable
Favorable
Contribution Margin
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Contribution Margin
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Neither Favorable nor Unfavorable
Favorable
Unfavorable
Controllable Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Controllable Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Controllable Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Controllable Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Total Variable Costs
Variable Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Neither Favorable nor Unfavorable
Unfavorable
Favorable
Controllable Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
Neither Favorable nor Unfavorable
Favorable
Unfavorable
Controllable Margin
Controllable Fixed Costs
Equipment Depreciation
Gas and Oil
Insurance
Material and Supplies
Service Revenue
Supervisory Salaries
Total Controllable Fixed Costs
Wages
Building Depreciation
Advertising
Billing
Property Taxes
$
$
$
Unfavorable
Favorable
Neither Favorable nor Unfavorable
Explanation / Answer
Ans-
Home Internet Service segment Budgeted Actual Service revenue 26,000 25,700 (300) U Variable Advertising 4,900 4,600 300 F Variable Billing 3,300 3,100 200 F Variable Material and supplies 1,700 1,000 700 F Variable Gas and oil 2,500 3,500 (1,000) U 12,400 12,200 200 F Contribution 13,600 13,500 (100) U Allocated portion of: Fixed Building depreciation 10,300 10,300 Fixed Property taxes 1,100 1,100 - - Fixed Supervisory salaries 8,700 9,600 (900) U Fixed Insurance 4,100 3,400 700 F Fixed Wages 3,300 3,000 300 F Fixed Equipment depreciation 1,600 1,400 200 F Total 29,100 28,800 300 F Net (15,500) (15,300) 200 FRelated Questions
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