Suppan Manufacturing Company manufactures a variety of tools and industrial equi

Question

Suppan Manufacturing Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2012, and relevant budget data are as follows.

Actual

Comparison with Budget

Average operating assets for the year for the Home Division were $2,500,110 which was also the budgeted amount.

Actual

Comparison with Budget

Sales $1,499,830 $100,830 favorable Variable cost of goods sold 692,510 59,840 unfavorable Variable selling and administrative expenses 125,850 24,600 unfavorable Controllable fixed cost of goods sold 169,180 On target Controllable fixed selling and administrative expenses 80,830 On target Prepare a responsibility report for the Home Division. (Round ROI to 1 decimal place, e.g. 1.5.) SUPPAN MANUFACTURING COMPANY Home Division Responsibility Report For the Year Ended December 31, 2012 Difference Favorable F Unfavorable U Neither Favorable nor Unfavorable N Actual Sales Controllable Margin Selling and Administrative Cost of Goods Sold Total Variable Costs Total Controllable Direct Fixed Costs Contribution Margin Gross Profit Controllable Direct Fixed Costs Variable Costs

Explanation / Answer

Suppan manufacturing Company Home division Responsibility report For the year ended 31 december, 2012 Actual Budget Variance Sales 1499830 1399000 100830 Favourable Variable costs Cost of goods sold 752350 692510 59840 Unfavourable selling & Administration 150450 125850 24600 Unfavourable Total 902800 818360 84440 Unfavourable Contribution margin 597030 580640 16390 Favourable Controllable Fixed costs Fixed Cost of goods sold 169180 169180 0 N selling & administrative 80830 80830 0 N Total 250010 250010 0 N Controllable Margin 347020 330630 16390 Favourable

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