Problem 10-5A a, c (Video)

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$100,000favorableVariable cost of goods sold665,00045,000unfavorableVariable selling and administrative expenses125,00025,000unfavorableControllable fixed cost of goods sold170,000On targetControllable fixed selling and administrative expenses80,000On target

Average operating assets for the year for the Home Division were $2,000,000which 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

Cost of Goods Sold

Controllable Direct Fixed Costs

Variable Costs

Gross Profit

Sales

Contribution Margin

Selling and Administrative

Total Controllable Direct Fixed Costs

Total Variable Costs

Controllable Margin

$

$

$

Favorable

Unfavorable

Neither Favorable nor Unfavorable

Controllable Margin

Total Controllable Direct Fixed Costs

Total Variable Costs

Controllable Direct Fixed Costs

Variable Costs

Cost of Goods Sold

Contribution Margin

Gross Profit

Sales

Selling and Administrative

Controllable Margin

Sales

Cost of Goods Sold

Gross Profit

Selling and Administrative

Total Controllable Direct Fixed Costs

Total Variable Costs

Variable Costs

Contribution Margin

Controllable Direct Fixed Costs

Favorable

Unfavorable

Neither Favorable nor Unfavorable

Controllable Margin

Cost of Goods Sold

Gross Profit

Sales

Selling and Administrative

Total Controllable Direct Fixed Costs

Total Variable Costs

Controllable Direct Fixed Costs

Variable Costs

Contribution Margin

Favorable

Unfavorable

Neither Favorable nor Unfavorable

Total Controllable Direct Fixed Costs

Selling and Administrative

Sales

Cost of Goods Sold

Gross Profit

Variable Costs

Total Variable Costs

Contribution Margin

Controllable Direct Fixed Costs

Controllable Margin

Favorable

Unfavorable

Neither Favorable nor Unfavorable

Variable Costs

Controllable Margin

Contribution Margin

Controllable Direct Fixed Costs

Cost of Goods Sold

Gross Profit

Sales

Selling and Administrative

Total Controllable Direct Fixed Costs

Total Variable Costs

Favorable

Unfavorable

Neither Favorable nor Unfavorable

Selling and Administrative

Controllable Margin

Total Controllable Direct Fixed Costs

Total Variable Costs

Variable Costs

Contribution Margin

Controllable Direct Fixed Costs

Cost of Goods Sold

Gross Profit

Sales

Total Variable Costs

Controllable Direct Fixed Costs

Variable Costs

Selling and Administrative

Cost of Goods Sold

Controllable Margin

Contribution Margin

Gross Profit

Sales

Total Controllable Direct Fixed Costs

Favorable

Unfavorable

Neither Favorable nor Unfavorable

Sales

Controllable Margin

Gross Profit

Total Variable Costs

Selling and Administrative

Controllable Direct Fixed Costs

Total Controllable Direct Fixed Costs

Variable Costs

Contribution Margin

Cost of Goods Sold

Favorable

Unfavorable

Neither Favorable nor Unfavorable

Total Variable Costs

Selling and Administrative

Variable Costs

Gross Profit

Sales

Cost of Goods Sold

Controllable Margin

Total Controllable Direct Fixed Costs

Contribution Margin

Controllable Direct Fixed Costs

Favorable

Unfavorable

Neither Favorable nor Unfavorable

Total Variable Costs

Variable Costs

Gross Profit

Contribution Margin

Controllable Direct Fixed Costs

Cost of Goods Sold

Controllable Margin

Total Controllable Direct Fixed Costs

Sales

Selling and Administrative

$

$

$

Favorable

Unfavorable

Neither Favorable nor Unfavorable

ROI

%

%

%

Favorable

Unfavorable

Neither Favorable nor Unfavorable

Your answer is incorrect.Try again.

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 by5%.

%(2)Average operating assets are decreased by10%.

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

%