For the year ending December 31, 2020, Sunland Company
accumulates the following data for the Plastics Division which it
operates as an investment center: contribution margin—$787,420
budget, $803,988 actual; controllable fixed costs—$300,700 budget,
$305,100 actual. Average operating assets for the year were
$2,028,000.
Prepare a responsibility report for the Plastics Division beginning
with contribution margin for the year ending December 31, 2020.
(Round ROI to 1 decimal place, e.g.
1.5%.)
SUNLAND COMPANY |
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Difference |
||||||||||
Budget |
Actual |
Favorable |
||||||||
Return on InvestmentControllable MarginVariable CostsContribution MarginFixed CostsControllable Fixed CostsGross ProfitNet Income/(Loss) |
$ | $ | $ |
FavorableUnfavorableNeither Favorable nor Unfavorable |
||||||
Gross ProfitControllable Fixed CostsReturn on InvestmentControllable MarginNet Income/(Loss)Fixed CostsVariable CostsContribution Margin |
FavorableUnfavorableNeither Favorable nor Unfavorable |
|||||||||
Contribution MarginNet Income/(Loss)Variable CostsControllable Fixed CostsControllable MarginFixed CostsReturn on InvestmentGross Profit |
$ | $ | $ |
FavorableUnfavorableNeither Favorable nor Unfavorable |
||||||
Controllable MarginNet Income/(Loss)Variable CostsControllable Fixed CostsFixed CostsGross ProfitContribution MarginReturn on Investment |
% | % | % |
FavorableUnfavorableNeither Favorable nor Unfavorable |
Ans. | SUNLAND COMPANY | |||||
Plastic Division | ||||||
Responsibility Report | ||||||
For the Year Ended December 31, 2020 | ||||||
Budget | Actual | Diffference (Fav/ Unf/ None) | ||||
Contribution margin | $787,420 | $803,988 | $16,568 | Favorable | ||
Controllable fixed costs | $300,700 | $305,100 | $4,400 | Unfavorable | ||
Controllable margin | $486,720 | $498,888 | $12,168 | Favorable | ||
Return on investment | 24.0% | 24.6% | 0.6% | Favorable | ||
*Increase in contribution margin and controllable margin from budget to actual = favorable. | ||||||
*Decrease in contribution margin and controllable margin from budget to actual = Unfavorable. | ||||||
*Increase in fixed cost from budget to actual is unfavorable. | ||||||
*Decrease in fixed cost from budget to actual is favorable. | ||||||
*Return on investment = Controllable margin / Average operating assets * 100 | ||||||
Budget | $486,720 / $2,028,000 * 100 | |||||
Actual | $498,888 / $2,028,000 * 100 | |||||
For the year ending December 31, 2020, Sunland Company accumulates the following data for the Plastics...
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