Lakem elder Dutch manufactures expensive watch eases sold as souvenirs.

Three ol its sales departments are: Retail Sales, Wholesale Sales, and Outlet Sales. The Retail Sales Department is a profit center. The Wholesale Sales Department is a cost center. Its managers merely take orders from customers who purchase through the company's wholesale catalog. The Outlet Sales Department is an investment center, because each manager is given lull responsibility for an outlet store location. The manager can hire and discharge employees, purchase, maintain, and sell equipment, and in general is fairly independent ol company control. Rena Worthington is a manager in the Retail Sales Department. Winston Hillhouse manages the Wholesale Sales Department. Oscar Hadley manages the Golden Gate Club outlet store in San Francisco. The following are the budget responsibility reports for each of the three departments.

Instructions

(a) Determine which of the items should be included in the responsibility report for each of the three managers.

(b) Compare the budgeted measures with the actual results. Decide which results should be called to the attention of each manager.

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Sales Variable costs Cost of goods sold Advertising Sales salaries Printing Travel Budget Retail Wholesale Outlet Sales Sales Sales $ 750,000 $ 400,000 $200,000 150,000 100,000 25,000 100,000 30,000 5,000 75,000 15,000 3,000 10,000 20,000 5,000 20,000 30,000 2,000 Fixed costs Rent 50,000 30,000 10,000 Insurance 5,000 2,000 1,000 Depreciation 75,000 100,000 40,000 Investment in assets $1,000,000 $1,200,000 $800,000