P11.54B (LO 4) Alosio Manufacturing Company manufactures a variety of tools and industrial equipment. The company operates three divisions. Each division is an investment centre. Operating data for the home division for the year ended December 31, 2022, and relevant budget data are as follows:

		Actual		Comparison with Budget
Sales		$1,400,000		$ 100,000 favourable
Variable cost of goods sold		675,000		55,000 unfavourable
Variable selling and administrative expenses		125,000		25,000 unfavourable
Controllable fixed cost of goods sold		170,000		On target
Controllable fixed selling and administrative expenses		80,000		On target

Average operating assets for the year for the home division were $2 million, which was also the budgeted amount.

Instructions

1. Prepare a responsibility report (in thousands of dollars) for the home division.

   a. Controllable margin: Budget: $330,000; Actual: $350,000

2. Evaluate the managers performance. Which items will likely be investigated by top management?
3. Calculate the ROI in 2022 for the home division, assuming the following independent changes:
   1. The variable cost of goods sold decreases by 5%.
   2. The average operating assets decrease by 10%.
   3. Sales increase by $200,000, and this increase is expected to increase the contribution margin by $85,000.

Compare ROI and residual income with supporting calculations.