Question

Problem 23-5A a, c (Video) (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, 2020, 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 $1,400,000 665,000 125,000 170,000 80,000 $100,000 favorable 45,000 unfavorable 25,000 unfavorable On target On target Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount.

Answer 1

Home Division
Responsibility Report
For the Year Ended December 31, 2020
	Budget	Actual	Difference
Sales	1300000	1400000	100000	Favorable
Variable costs
Cost of goods sold	620000	665000	45000	Unfavorable
Selling and administrative	100000	125000	25000	Unfavorable
Total variable costs	720000	790000	70000	Unfavorable
Contribution margin	580000	610000	30000	Favorable
Controllable direct fixed costs
Cost of goods sold	170000	170000	0	Neither favorable nor Unfavorable
Selling and administrative	80000	80000	0	Neither favorable nor Unfavorable
Total Controllable direct fixed costs	250000	250000	0	Neither favorable nor Unfavorable
Controllable margin	330000	360000	30000	Favorable
ROI	16.5%	18.0%	1.5%	Favorable