10-5A Actual Comparison with Budget $1,401,000 $100,000 favorable Sales Variable
ID: 2562911 • Letter: 1
Question
10-5A Actual Comparison with Budget $1,401,000 $100,000 favorable Sales Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative expenses 55,000 unfavorable 24,000 unfavorable 675,000 126,000 170,000 On target 81,000 On target Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount. Prepare a responsibility report for the Home Division. (List variable costs before fixed costs. Round ROI to 1 decimal place, e.g. 1.5 OPTIMUS COMPANY Home Division Responsibility Report For the Year Ended December 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual s 2000000 Sales $ 1401000 Variable Costs Cost of Goods Sold 675000 Selling and Administrative 126000 Total Variable Costs Controllable MarginExplanation / Answer
1. Responsibility Report and ROI is as prepared below:
Return on Income is net income divided by average operating assets.
ROI under the 3 situations.
Optimus Company Home Division Responsibility Budget For the Year Ended December 31, 2017 Difference Budget Actual F/U/None Sales 1,301,000 1,401,000 -100,000 Favourable Variable Costs Cost of goods sold 620,000 675,000 -55,000 Unfavourable Selling and administrative 102000 126,000 -24,000 Unfavourable Total Variable costs 722,000 801,000 -79,000 Unfavourable Contribution Margin 579,000 600,000 -21,000 Favourable Controllable Direct Fixed Costs 0 Cost of goods sold 170,000 170,000 0 None Selling and administrative 81,000 81,000 0 None Total fixed costs 251,000 251,000 0 None Net Income 328,000 349,000 -21,000 Favourable Average Operating assets 2,000,000 2,000,000 ROI 16.4% 17.5%Related Questions
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