Hello nice to meet you, I really need this last question for my accounting course to be completed.

MANAGERIAL ANALYSIS BYP21-2 Lanier Company manufactures expensive watch cases sold as souvenirs. Three of itssales departments are: Retail Sales, Wholesale Sales, and Outlet Sales. The Retail Sales Departmentis a profit center. The Wholesale Sales Department is a cost center. Its managers merely take ordersfrom customers who purchase through the company?swholesale catalog. The Outlet SalesDepartment is an investment center because each manager is given full responsibility for an out- let store location. The manager can hire and discharge employees, purchase, maintain, and sellequipment, and in general is fairly independent of company control. Mary Gammel is a manager in the Retail Sales Department. Stephen Flott manages theWholesale Sales Department. Jose Gomez manages the Golden Gate Club outlet store inSan Francisco. The following are the budget responsibility reports for each of the threedepartments.

I have attached documents of the question but if for some reason you cannot access them, this is a link to the question. It's number BYP21-2

(https://www.coursehero.com/file/p2ermm2/This-problem-gives-you-static-budget-information-as-well-as-actual-overhead/)

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.

Question 1. Items to Be included in Responsibility Reports. Mary Gammel She is a manager in the retail sales department which is a profit center. Her main duty is to keep a continous check on the results of the profit center because it is a major key driver of the total results of the Lanier company. Mary Gammel should therefore include in the report the decisions she made concerning how revenue was to be earned as per the budget and which expenses were to be incurred. Likewise, she should do the same with the actual performance of the department. This is because these are the determinants of the profitability of the department. Stephen Flott Stephen is a manager in the wholesale sales department and it is a cost center. The main responsibility for Stephen here is to manage the costs and include in the reports more information about the costs incurred in the cost center. Jose Gomez He is a manager in the Golden Gate Club outlet store in San Francisco which is an investment center. What should be included in the responsibility report is the return on the assets. Question 2. Mary Gammel Mary is in management of the profitability of the department, should be called to her attention the adverse variance in the total net profit shown by the difference of $ 35,000. The budgeted profit was $ 265,000 and the actual one was $ 230,000, resulting to the adverse variance which Mary should both give an explanation as to why the adversity occured and provide the way forward. Stephen Flott Stephen has the responsibility to manage the costs incurred in the cost center. It should be brought into his attention , the variance between the actual cost of goods sold ($120,000) and the budgeted cost of $ 100,000. This variance is an adverse one and Stephen must explain the way forward. Moreover, there is an adverse fixed cost on rent of $ 20,000 which is not well explained. Jose Gomez Since John manages an investment center, and is in charge of the return on the assets, he should be called into attention of the adverse variance of return on assets invested(ROI). The actual is 86250/800000=0.107 while the budgeted was 109,000/800,000=0.13. Question 1. Items to Be included in Responsibility Reports. Mary Gammel She is a manager in the retail sales department which is a profit center. Her main duty is to keep a continous check on the results of the profit center because it is a major key driver of the total results of the Lanier company. Mary Gammel should therefore include in the report the decisions she made concerning how revenue was to be earned as per the budget and which expenses were to be incurred. Likewise, she should do the same with the actual performance of the department. This is because these are the determinants of the profitability of the department. Stephen Flott Stephen is a manager in the wholesale sales department and it is a cost center. The main responsibility for Stephen here is to manage the costs and include in the reports more information about the costs incurred in the cost center. Jose Gomez He is a manager in the Golden Gate Club outlet store in San Francisco which is an investment center. What should be included in the responsibility report is the return on the assets. Question 2. Mary Gammel Mary is in management of the profitability of the department, should be called to her attention the adverse variance in the total net profit shown by the difference of $ 35,000. The budgeted profit was $ 265,000 and the actual one was $ 230,000, resulting to the adverse variance which Mary should both give an explanation as to why the adversity occured and provide the way forward. Stephen Flott Stephen has the responsibility to manage the costs incurred in the cost center. It should be brought into his attention , the variance between the actual cost of goods sold ($120,000) and the budgeted cost of $ 100,000. This variance is an adverse one and Stephen must explain the way forward. Moreover, there is an adverse fixed cost on rent of $ 20,000 which is not well explained. Jose Gomez Since John manages an investment center, and is in charge of the return on the assets, he should be called into attention of the adverse variance of return on assets invested(ROI). The actual is 86250/800000=0.107 while the budgeted was 109,000/800,000=0.13