Brief Exercise 10-7 Torres Company accumulates the following summary data for th

Question

Brief Exercise 10-7

Torres Company accumulates the following summary data for the year ending December 31, 2017, for its Water Division, which it operates as a profit center: sales—$2,000,000 budget, $2,080,000 actual; variable costs—$1,000,000 budget, $1,050,000 actual; and controllable fixed costs—$300,000 budget, $305,000 actual.

Prepare a responsibility report for the Water Division.

TORRES COMPANY
Water Division
Responsibility Report
For the Year Ended December 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

TORRES COMPANY
Water Division
Responsibility Report
For the Year Ended December 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

SalesNet Income/(Loss)Controllable Fixed CostsVariable CostsContribution MarginControllable MarginGross ProfitFixed Costs

$

$

$

FavorableUnfavorableNeither Favorable nor Unfavorable

Gross ProfitControllable Fixed CostsControllable MarginSalesFixed CostsNet Income/(Loss)Variable CostsContribution Margin

FavorableUnfavorableNeither Favorable nor Unfavorable

Controllable Fixed CostsFixed CostsControllable MarginContribution MarginVariable CostsGross ProfitNet Income/(Loss)Sales

FavorableUnfavorableNeither Favorable nor Unfavorable

Gross ProfitNet Income/(Loss)Variable CostsContribution MarginControllable Fixed CostsSalesFixed CostsControllable Margin

FavorableUnfavorableNeither Favorable nor Unfavorable

Variable CostsNet Income/(Loss)Contribution MarginFixed CostsSalesControllable MarginGross ProfitControllable Fixed Costs

$

$

$

FavorableUnfavorableNeither Favorable nor Unfavorable

Explanation / Answer

TORRES COMPANY Water Division Responsibility Report For the Year Ended December 31, 2017 Difference Budget Actual Favorable Unfavorable Neither Favorable nor Unfavorable Sales            2,000,000.00                               2,080,000.00                       80,000.00 Favorable Variable Costs            1,000,000.00                               1,050,000.00                       50,000.00 Unfavorable Contribution Margin            1,000,000.00                               1,030,000.00                       30,000.00 Favorable Controllable Fixed Costs                300,000.00                                  305,000.00                         5,000.00 Unfavorable Controllable Margin                700,000.00                                  725,000.00                       25,000.00 Favorable

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