ended December 31, 2017, and relevant budget data are as follows. $ 1 ,400,000 6
ID: 2586678 • Letter: E
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ended December 31, 2017, and relevant budget data are as follows. $ 1 ,400,000 665,000 125,000 170,000 80,000 100,000 favorable 45,000 unfavorable 25,000 unfavorable Variable cost of goods sold Variable selling and administrative expenses Controliable fixed cost of goods sold On target On target e $2,000,000 which was also the budgeted Average operating assets fort r for the, Home Division wer Your answer is correct fixed costs, Round Prepare a responsibility report for the Home Division. (List variable costs before ROI to 1 decimal place,e.g.1.5.) OPTIMUS COMPANY Home Divisionn Responsibility Report the Year Ended December 31, 2017 Unfavorable Neither Favorable nor Unfavorable Actual 100000 arlable 20000-665000 5000 enfavorabla Selling and Administrative Toooo 125000) [25 00 unfavorable st of Goods So otal Variable Costs 72000 79000 nfavorabl 80000 00 Favorable ntribution Mar ntrollable Direct Fixed 70000) either Favorable r Unfavorable ost of Goods So 70000 1 either Favorable ing and Administrative or Unfavorable otal Controllable Direct ixed Costs either Favorable r Unfavorable 5000 1/2 htps:/edugen wileyplus.com/edugen shared assignment test/gprint.uni ntrollable Margi 30000 avorabl d63 % ROI avorabl Attempts: 4 of 5 used Compute the expected ROI in 2017 for the Home Division, assuming the following independent changes to actual data. (Round ROI to 1 decimal place, e.g. 1.5.) The expected ROI (1) Variable cost of goods sold is decreased by 5% (2) Average operating assets are decreased by 10% (3) Sales are increased by $200,000, and this increase is expected to increase contribution margin by $80,000 Attempts: 0 of 5 used or rebtidExplanation / Answer
1. Decrease in cost of goods sold by 5% Controllable margin $360,000.00 Add decrease in cost of goods sold = $665,000 x 5% $33,250.00 New Controllable margin $393,250.00 divide by average operating assets $2,000,000.00 Expected ROI 19.7% 2. Decrease in average assets by 10% Average operating assets $2,000,000.00 Less reduction in average operating assets = $2,000,000 x 10% -$200,000.00 New average operating asset $1,800,000.00 Controllable margin $360,000.00 Divide by New average operating asset $1,800,000.00 Expected ROI 20.0% 3. increase average sales by $200,000 and as a result increase in contribution margin by $80,000 Controllable margin $360,000.00 Add increase in contribution margin $80,000.00 New controllable margin $440,000.00 divide by average operating assets $2,000,000.00 Expected ROI 22.0%
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