UrLink Company is a newly formed company specializing in high-speed Internet ser

Question

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

Prepare a responsibility report for the first quarter of 2017 for the Home Internet Service Segment.

Budgeted

Actual

Service revenue $24,500 $25,500 Allocated portion of:      Building depreciation 10,200 10,200      Advertising 5,500 4,300      Billing 3,300 3,300      Property taxes 1,200 1,200 Material and supplies 1,600 1,100 Supervisory salaries 8,900 9,700 Insurance 3,900 3,000 Wages 3,300 3,500 Gas and oil 2,700 3,100 Equipment depreciation 1,400 1,300

Explanation / Answer

Solution:-

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URLINK COMPANY Home Based Internet Services Responsibility report for the querter ended May 2017 Particulars Budget Actual Service revenue 24,500 25,500 Variable cost: Material and supplies 1,600 1,100 Wages 3,300 3,500 Gas and oil 2,700 3,100 Total variable cost 7,600 7,700 Contribution margin 16,900 17,800 Controllable fixed costs: Supervisor salaries 8,900 9,700 Insurance 3,900 3,000 Equipment depreciation 1,400 1,300 Total Controllable fixed costs 14,200 14,000 Controllable margin 2,700 3,800

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