Question
E24-16 The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $900,000. The
E24-16 The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $900,000. The only variable costs budgeted for the division were cost of goods sold ($440,000) and selling and administra- tive ($60,000). Fixed costs were budgeted at $100,000 for cost of goods sold, $90,000 for selling and administrative, and $70,000 for noncontrollable fixed costs. Actual results for these items were: Sales Cost of goods sold Variable Fixed Selling and administrative Variable Fixed Noncontrollable fixed $880,000 408,000 105,000 61,000 66,000 90,000 Instructions (a) Prepare a responsibility report for the Sports Equipment Division for 2017. (b) Assume the division is an investment center, and average operating assets were $1,000,000. The noncontrollable fixed costs are controllable at the investment center level. Compute ROI. Prepare a responsibility report for a profit center, and compute ROI. (LO 3, 4)
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