Question

Problem 10-4A Clarke Inc. operates the Patio Furniture Division as a profit center. Operating data for this division for the year ended December 31, 2017, are as shown below. Difference Budget from Budget $2,495,300 $46,300 Favorable Sales Cost of goods sold Variable 1,291,900 190,200 42,600 Favorable 3,600 Unfavorable Controllable fixed Selling and administrative Variable Controllable fixed 214,600 48,700 69,900 7,900 Unfavorable 1,700 Unfavorable 3,400 Unfavorable Noncontrollable fixed costs In addition, Clarke incurs $183,600 of indirect fixed costs that were budgeted at $173,000. Twenty percent (20%) of these costs are allocated to the Patio Furniture Division.

Answer 1

Patio Furniture Division
Responsibility Report
For the Year Ended December 31, 2017
	Budget	Actual	Difference
Sales	2449000	2495300	46300	Favorable
Variable costs
Cost of goods sold	1334500	1291900	42600	Favorable
Selling and administrative	206700	214600	7900	Unfavorable
Total variable costs	1541200	1506500	34700	Favorable
Contribution margin	907800	988800	81000	Favorable
Controllable fixed costs
Cost of goods sold	186600	190200	3600	Unfavorable
Selling and administrative	47000	48700	1700	Unfavorable
Total Controllable fixed costs	233600	238900	5300	Unfavorable
Controllable margin	674200	749900	75700	Favorable