Exercise 10-16

The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $897,800. The only variable costs budgeted for the division were cost of goods sold ($443,890) and selling and administrative ($61,480). Fixed costs were budgeted at $102,670 for cost of goods sold, $92,780 for selling and administrative, and $71,070 for noncontrollable fixed costs. Actual results for these items were:

Sales $882,020

Cost of goods sold

Variable 410,490

Fixed 106,940

Selling and administrative

Variable 61,250

Fixed 70,560

Noncontrollable fixed 91,330

Prepare a responsibility report for the Sports Equipment Division for 2017. (List variable costs before fixed costs.)

HARRINGTON COMPANY

Sports Equipment Division

Responsibility Report

2017

Budget Actual Difference Favorable Unfavorable

Neither Favorable

nor Unfavorable

$

$

$

$

$

$

Assume the division is an investment center, and average operating assets were $1,188,300. The noncontrollable fixed costs are controllable at the investment center level. Compute ROI. (Round ROI to 1 decimal place, e.g. 1.5.)

Return on investment %