Optimus Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2020, and relevant budget data are as follows.

Actual

Comparison with Budget

Sales$1,400,000$100,000 favorable

Variable cost of goods sold665,00045,000 unfavorable

Variable selling and administrative expenses125,00025,000 unfavorable

Controllable fixed cost of goods sold170,000On target

Controllable fixed selling and administrative expenses80,000On target

Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount.

Prepare a responsibility report for the Home Division. (List variable costs before fixed costs. Round ROI to 2 decimal places, e.g. 1.57%.)

OPTIMUS COMPANY Home Division Responsibility Report For the Year Ended December 31, 2020

Difference

Budget

Actual

Favorable Unfavorable Neither Favorable nor Unfavorable

Gross ProfitControllable Direct Fixed CostsTotal Variable CostsVariable CostsContribution MarginControllable MarginTotal Controllable Direct Fixed CostsSalesCost of Goods SoldSelling and Administrative

$ $ $

FavorableUnfavorableNeither Favorable nor Unfavorable

SalesContribution MarginControllable Direct Fixed CostsSelling and AdministrativeControllable MarginCost of Goods SoldGross ProfitTotal Controllable Direct Fixed CostsTotal Variable CostsVariable Costs

Variable Costs Controllable Margin Contribution Margin Selling and Administrative Controllable Direct Fixed Costs Cost of Goods Sold Gross Profit Sales Total Controllable Direct Fixed Costs Total Variable Costs

FavorableUnfavorableNeither Favorable nor Unfavorable

Contribution Margin Total Controllable Direct Fixed Costs Controllable Direct Fixed Costs Selling and Administrative Total Variable Costs Variable Costs Controllable Margin Cost of Goods Sold Gross Profit Sales

FavorableUnfavorableNeither Favorable nor Unfavorable

Variable Costs Selling and Administrative Cost of Goods Sold Total Controllable Direct Fixed Costs Controllable Direct Fixed Costs Total Variable Costs Sales Contribution Margin Gross Profit Controllable Margin

FavorableUnfavorableNeither Favorable nor Unfavorable

SalesSelling and AdministrativeContribution MarginGross ProfitTotal Controllable Direct Fixed CostsVariable CostsTotal Variable CostsControllable Direct Fixed CostsControllable MarginCost of Goods Sold

FavorableUnfavorableNeither Favorable nor Unfavorable

Total Variable CostsControllable MarginVariable CostsContribution MarginCost of Goods SoldGross ProfitControllable Direct Fixed CostsTotal Controllable Direct Fixed CostsSalesSelling and Administrative

Contribution Margin Sales Selling and Administrative Variable Costs Cost of Goods Sold Total Controllable Direct Fixed Costs Controllable Direct Fixed Costs Controllable Margin Total Variable Costs Gross Profit

FavorableUnfavorableNeither Favorable nor Unfavorable

Controllable Margin Total Variable Costs Sales Total Controllable Direct Fixed Costs Cost of Goods Sold Variable Costs Contribution Margin Controllable Direct Fixed Costs Selling and Administrative Gross Profit

FavorableUnfavorableNeither Favorable nor Unfavorable

Total Controllable Direct Fixed Costs Controllable Margin Cost of Goods Sold Variable Costs Selling and Administrative Gross Profit Total Variable Costs Contribution Margin Controllable Direct Fixed Costs Sales

FavorableUnfavorableNeither Favorable nor Unfavorable

Controllable Direct Fixed CostsControllable MarginCost of Goods SoldGross ProfitSalesSelling and AdministrativeTotal Controllable Direct Fixed CostsTotal Variable CostsVariable CostsContribution Margin

$ $ $

FavorableUnfavorableNeither Favorable nor Unfavorable

ROI % % %

FavorableUnfavorableNeither Favorable nor Unfavorable

Compute the expected ROI in 2020 for the Home Division, assuming the following independent changes to actual data. (Round ROI to 2 decimal places, e.g. 1.57%.)

The expected ROI

(1)Variable cost of goods sold is decreased by 5%. %

(2)Average operating assets are decreased by 10%. %

(3)Sales are increased by $200,000, and this increase is expected to increase contribution margin by $80,000. %