Problem 22-5A (Part Level Submission) Optimus Company manulactures a variety of

Question

Problem 22-5A (Part Level Submission) Optimus Company manulactures 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 vear ended December 31, 2017, and relevant budget data are as follows. Actual wilh Budgel Sales Variable cost of goods sold Variable seling and administrative expenses Controlable fixed cost of goods sold Controlahle fixed selling and administrative expenses 1,400,DD 01,DDD favarable 55,DD0 unfavorable 675,D00 126,000 25,000 unfavorable 170,000 Ontaroet 81,000 On target Average aperating assets for the year for the Home Division were $1,,00 which was also the budgeted amount. o,a00

Explanation / Answer

Budget Actual Difference Sales 1299000 1400000 101000 Favorable Variable costs: Cost of goods sold 620000 675000 55000 Unfavorable Selling and admin costs 101000 126000 25000 Unfavorable Total variable costs 721000 801000 80000 Unfavorable Contribution margin 578000 599000 21000 Favorable Controllable direct fixed costs Cost of goods sold 170000 170000 0 Neither Favorable nor unfavorable Selling and admin costs 81000 81000 0 Neither Favorable nor unfavorable Total Controllable direct fixed costs 251000 251000 0 Neither Favorable nor unfavorable Controllable margin 327000 348000 21000 Favorable ROI 16.4% 17.4% 1.0% Favorable

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