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Question 2 CH 14 Budgetary Control and Responsibility Accounting {25 mins) Prepare a responsibility report for an investment center. The Dinkle and F rizell Dental Clinic provides both preventive and orthodontic dental services. The two owners, Reese Dinkle and Anita Frizell, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the centers: Reese for Preventive Services and Anita for Orthodontic Services. Each month, they prepare an income statement for the two centers to evaluate performance and make decisions about how to improve the operational efciency and protability of the clinic. Recently, they have been concerned about the protability of the Preventive Services operations. For several months, it has been reporting a loss. The responsibility report for the month of May 2017 is shown below. Difference from Actual Budget Service revenue .8 40,000 $1,000 F Variable costs Filling materials 5,000 100 U Novocain 3,900 100 U Supplies 1,900 350 F Dental assistant wages 2,500 0 Utilities 500 110 U Total variable costs 13,800 40 F Fixed costs Allocated portion of receptionist's salary 3,000 200 U Dentist salary 9,800 400 U Equipment depreciation 6,000 -0 Allocated portion of building depreciation 15,000 1,000 U Total xed costs 33,800 1,600 U Operating income (loss) 5 (7,600) $ 560 U In addition, the owners know that the investment in operating assets at the beginning of the month was $82,400, and it was $77,600 at the end of the month. They have asked for your assistance in evaluating their current performance reporting system. Instructions (a) Prepare a responsibility report for an investment center as illustrated in the chapter. (b) Write a memo to the owners discussing the deciencies of their current reporting system