Question

Question 4 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 $2,501,400 $46,000 Favorable 1,309,500 206,500 39,500 Favorable 3,000 Unfavorable Sales Cost of goods sold Variable Controllable fixed Selling and administrative Variable Controllable fixed Noncontrollable fixed costs 216,2006,900 Unfavorable 50,000 1,700 Unfavorable 73,500 3,700 Unfavorable In addition, Clarke incurs $175,000 of indirect fixed costs that were budgeted at $171,900. Twenty percent (20%) of these costs are allocated to the Patio Furniture Division. Prepare a responsibility report for the Patio Furniture Division for the year. (List variable costs before fixed costs.)

Answer 1

	Budget	Actual	Difference
Sales	2501400	2547400	46000	Favorable
Variable costs
Cost of goods sold	1309500	1270000	39500	Favorable
Selling and administrative	216200	223100	6900	Unfavorable
Total Variable costs	1525700	1493100	32600	Favorable
Contribution margin	975700	1054300	78600	Favorable
Controllable fixed costs
Cost of goods sold	206500	209500	3000	Unfavorable
Selling and administrative	50000	51700	1700	Unfavorable
Total Controllable fixed costs	256500	261200	4700	Unfavorable
Controllable margin	719200	793100	73900	Favorable