Brief Exercise 10-8 For the year ending December 31, 2017, Cobb Company accumula

Question

Brief Exercise 10-8

For the year ending December 31, 2017, Cobb Company accumulates the following data for the Plastics Division which it operates as an investment center: contribution margin—$700,000 budget, $710,000 actual; controllable fixed costs—$300,000 budget, $302,000 actual. Average operating assets for the year were $2,000,000.

Prepare a responsibility report for the Plastics Division beginning with contribution margin. (Round ROI to 1 decimal place, e.g. 1.5.)

COBB COMPANY
Plastics Division
Responsibility Report
For the Year Ended December 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

COBB COMPANY
Plastics Division
Responsibility Report
For the Year Ended December 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

Controllable Fixed CostsNet Income/(Loss)Contribution MarginControllable MarginReturn on InvestmentVariable CostsFixed CostsGross Profit

$

$

$

FavorableUnfavorableNeither Favorable nor Unfavorable

Return on InvestmentNet Income/(Loss)Controllable Fixed CostsControllable MarginContribution MarginGross ProfitVariable CostsFixed Costs

FavorableUnfavorableNeither Favorable nor Unfavorable

Return on InvestmentGross ProfitVariable CostsControllable MarginFixed CostsNet Income/(Loss)Contribution MarginControllable Fixed Costs

$ $ $

FavorableUnfavorableNeither Favorable nor Unfavorable

Gross ProfitReturn on InvestmentFixed CostsControllable Fixed CostsVariable CostsControllable MarginContribution MarginNet Income/(Loss)

% % %

FavorableUnfavorableNeither Favorable nor Unfavorable

Explanation / Answer

Cobb Company Plastic Division Resposibility Report For the year ended 31st December 2017 Budget Actual Difference Contribution Margin                        7,00,000                        7,10,000        10,000 Favorable Controllable Fixed Cost                        3,00,000                        3,02,000           2,000 Unfavorable Controllable Margin                        4,00,000                        4,08,000           8,000 Favorable Return on Investmet 20.00% 20.40% 0.40% Favorable (400,000/2,000,000) (408,000/2,000,000)

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