Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

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

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 $1,399,000 $100,000 favorable
Variable cost of goods sold 680,000 54,000 unfavorable
Variable selling and administrative expenses 124,000 24,000 unfavorable
Controllable fixed cost of goods sold 170,000 On target
Controllable fixed selling and administrative expenses 81,000 On target

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

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 20.0%. %
(3) Sales are increased by $201,000, and this increase is expected to increase contribution margin by $84,000. %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Decision Emphasis

Authors: Germain Boer, Debra Jeter

5th Edition

0759341559, 978-0759341555

More Books

Students explore these related Accounting questions