Question

Problem 22-5A (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. Sales Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative expenses Actual $1,401,000 675,000 125,000 169,000 79,000 Comparison with Budget $101,000 favorable 55,000 unfavorable 26,000 unfavorable On target On target Average operating assets for the year for the Home Division were 52,001,000 which was also the budgeted amount. (a) Your answer is partially correct. Try again. 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 TSales 1401000 101,000 Favorable 1502000 TVariable Costs Cost of Goods Sold 620000 T 675000 55,000 TUnfavorable Selling and Administrative 125000 26,000 TUnfavorable 99000 719000 Total Variable costs T. 800000 81000 Unfavorable Contribution Margin 783000 601000 182000 Unfavorable T Controllable Direct Fixed Costs Cost of Goods Sold 169000 169000 Neither Favorable nor Unfavorable Selling and Administrative 79000 1 79000 Neither Favorable nor Unfavorable y Total Controllable Direct Fixed Costs 248000 248000 wo Neither Favorable nor Unfavorable T Controllable Margin 535000 353000 182000 Unfavorable ROI Unfavorable

Answer 1

Solution Optimus COMPANY Home Division Respouribility Report the year anded Dec 31,2017 for Budget | Actual Difference favouable unfavourable Aceither favoured non Undavalli 8000 601000 Sales ca) 3wew 140/000 10/000 favouable Variable Costi Cost of Goods sold 62000 o 678600 55000 unfaronasle selling and Administrative | 99000 12000o 26000 unfawouable rosal variable Cost (6) 719000 81000 Julewoudde Contribution Margin((ab) 581000 20000 favourable Controllable alisech Eixed Costs: Cost of Goods sold 168000 Selling and Aleixistatuie TotalControllable Direct fixed Costs (d 248000 333000 Controllable Morgün C) = (c)-cd) 353000 favorable 20000 ROI (f) = 9 7 9) X 100 [ 16.691 $7.64% 8.00% 79000 (69ασο 790 248000 Neither faw nor Unfo Neither few nor unfore. Neither fow norcuyau favourable eage operative Asicho X leo I Retuen of Return of Income & Controllable Maegin Avercepe operativy Astello Here, Average operating Asset = 200000 Budgeted Retuen an Ihresment = 333000 x wo = 16.667. 2001000 Actual Return on Investueus = 353**xwe 1764% 200/ # If the actual sale is $140looo, which is fowarasle, then the budgeted sales would be $ 1300000 ($ 140/000-$10/000).