Question

Problem 22-SA (Part Level Submission) 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 Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative expenses $1,400,000 674,000 124,000 169,000 30,000 $101.000 favorable 54,000 unfavorable 25,000 unfavorable On target On target Average operating assets for the year for the Home Division were $2,001,000 which was also the budgeted amount. (a) Your answer is correct. Prepare a responsibility report for the Home Division (List variable costs before fixed costs. Round Ror to 1 decimal place, e.g. 1.5.) OPTIMUS COMPANY Home Division Responsibility Report For the Year Ended December 31, 2017 Difference

Answer 1

solution - i) variable cost of goods sold is decreased by 61. : Given that, actual contribution Margin = $.353,000 Variable Cost Of goods sold - $ 67h1OOO Average operating Assets = $2,001,000 Revised contribution Actual .: Decrease in a - margin - contribution t variable cost of Margin ... goods sold -$353,000 +($G7H0OO X0.05) -$ 393,440 ROT - Revised. contribution margin Average operating Assets - $393,440 $2,001,000 160 => 19.64.

3) Average operating Assets are decreased by 110.- Given that, Actual contribution Margin = $353,000 Average operating Assets ;$2,001,000 Revised Avereige. = $2,001.000 - 11% operating Assets = $1,780,890 ROI 4100 contribution Margin Revised Average Operating Assels $353,000 $1,780,90 X100 = 19.8.1,

3) sales are increased by $200.000 and this increase is expected to increase contribution margin by $85,000. Given that Actual contribution Margin=$353,000 Average operating Assets =$2,001,000 Revised contribution Margin actual 1 Increase in = contribution + Contrlbution Margin . . margin - $353,000 + $85,000 = $138,000 - Xbo Revised contribution Margin Average operating Assets - $138,000 4100 22,0011000 = 421-8).

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