Schwinn Manufacturing Company manufactures a variety of garden and lawn equipment. The company operates through three divisions.
Question:
Schwinn Manufacturing Company manufactures a variety of garden and lawn equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Lawnmower Division for the year ended December 31, 2010, and relevant budget data are as follows.
Average operating assets for the year for the Lawnmower Division were $5,000,000 which was also the budgeted amount.Instructions(a) Prepare a responsibility report (in thousands of dollars) for the Lawnmower Division.(b) Evaluate the manager's performance. Which items will likely be investigated by top management?(c) Compute the expected ROI in 2011 for the Lawnmower Division, assuming the following independent changes.(1) Variable cost of goods sold is decreased by 15%.(2) Average operating assets are decreased by 20%.(3) Sales are increased by $500,000 and this increase is expected to increase contribution margin by$210,000.
Contribution MarginContribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Step by Step Answer:
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso