Oralax Inc. manufactures a variety of outdoors equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Lawn Division for the year ended December 31, 2019, and relevant budget data are as follows.

Average operating assets for the year for the lawn Division were $5,000,000 which was also the budgeted amount.

Instructions

1. Prepare a responsibility report for the Lawn Division.

2. Evaluate the managers performance. Which items will likely be investigated by top management?

3. Compute the expected ROI in 2019 for the Lawn Division, assuming the following independent changes to actual costs.

a. Controllable fixed cost of goods sold increased by 15%.

b. Average operating assets are decreased by 20%.

c. Sales are increased by $500,000 and this increase is expected to increase contribution margin by $210,000.