Actual Comparison with Budget (a) OPTIMUS COMPANY Home Division Responsibility R

Question

Actual

Comparison with Budget

(a)

OPTIMUS COMPANY
Home Division
Responsibility Report
For the Year Ended December 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

Optimus Company manufactures 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 year ended December 31, 2017, and relevant budget data are as follows.

Actual

Comparison with Budget

Sales $1,400,000 $101,000 favorable Variable cost of goods sold 676,000 55,000 unfavorable Variable selling and administrative expenses 124,000 25,000 unfavorable Controllable fixed cost of goods sold 170,000 On target Controllable fixed selling and administrative expenses 79,000 On target
Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount.

Explanation / Answer

Budget Actual Difference Sales 1299000 1400000 101000 F Variable costs: Cost of goods sold 621000 676000 55000 U Selling and administrative expenses 99000 124000 25000 U Total Variable costs 720000 800000 80000 U Contribution margin 579000 600000 21000 F Cntrollable direct fixed costs Cost of goods sold 170000 170000 0 N Selling and administrative expenses 79000 79000 0 N Total Controllable Direct Fixed Costs 249000 249000 0 N Total controllable margin 330000 351000 21000 F ROI 16.5% 17.6% 1.1% F

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