Chudzik Manufacturing Company makes garden and lawn equipment. The company operates through three divisions. Each division is an investment centre. Operating data for the lawn mower division for the year ended December 31, 2012, and relevant budget data are as follows:

Average operating assets for the year for the lawn mower division were $5 million, which was also the budgeted amount.
Instructions
(a) Prepare a responsibility report (in thousands of dollars) for the lawn mower division.
(b) Evaluate the manager's performance. Which items will likely be investigated by top management?
(c) Calculate the expected ROI in 2013 for the lawn mower division, assuming the following independent changes:
1. The variable cost of goods sold decreases by 15%.
2. The average operating assets decrease by 20%.
3. Sales increase by $500,000 and this increase is expected to increase the contribution margin by $210,000.

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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 $2,900,000 1,400,000 30,000 270,000 140,000 $120,000 unfavourable 90,000 unfavourable 60,000 favourable On target On target