Exercise 24-11

UrLink Company is a newly formed company specializing in high-speed Internet service for home and business. The owner, Lenny Kirkland, had divided the company into two segments: Home Internet Service and Business Internet Service. Each segment is run by its own supervisor, while basic selling and administrative services are shared by both segments. Lenny has asked you to help him create a performance reporting system that will allow him to measure each segments performance in terms of its profitability. To that end, the following information has been collected on the Home Internet Service segment for the first quarter of 2017.

Budgeted Actual Service revenue $ 26,000 $ 25,700 Allocated portion of: Building depreciation 10,300 10,300 Advertising 4,900 4,600 Billing 3,300 3,100 Property taxes 1,100 1,100 Material and supplies 1,700 1,000 Supervisory salaries 8,700 9,600 Insurance 4,100 3,400 Wages 3,300 3,000 Gas and oil 2,500 3,500 Equipment depreciation 1,600 1,400

Prepare a responsibility report for the first quarter of 2017 for the Home Internet Service segment.

URLINK COMPANY Home Internet Services Segment Responsibility Report For the Quarter Ended March 31, 2017 Difference Budget Actual Favorable Unfavorable Neither Favorable nor Unfavorable Controllable Margin Contribution Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes $ $ $ Favorable Unfavorable Neither Favorable nor Unfavorable Contribution Margin Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes Contribution Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes Favorable Neither Favorable nor Unfavorable Unfavorable Contribution Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes Neither Favorable nor Unfavorable Favorable Unfavorable Contribution Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes Unfavorable Neither Favorable nor Unfavorable Favorable Contribution Margin Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes Favorable Unfavorable Neither Favorable nor Unfavorable Contribution Margin Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes Neither Favorable nor Unfavorable Favorable Unfavorable Controllable Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Wages Building Depreciation Advertising Billing Property Taxes Controllable Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes Favorable Unfavorable Neither Favorable nor Unfavorable Controllable Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes Favorable Unfavorable Neither Favorable nor Unfavorable Controllable Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Total Variable Costs Variable Costs Wages Building Depreciation Advertising Billing Property Taxes Neither Favorable nor Unfavorable Unfavorable Favorable Controllable Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Wages Building Depreciation Advertising Billing Property Taxes Neither Favorable nor Unfavorable Favorable Unfavorable Controllable Margin Controllable Fixed Costs Equipment Depreciation Gas and Oil Insurance Material and Supplies Service Revenue Supervisory Salaries Total Controllable Fixed Costs Wages Building Depreciation Advertising Billing Property Taxes $ $ $ Unfavorable Favorable Neither Favorable nor Unfavorable