SECTION A Question 1 Patterson Ltd manufactures and sells security systems. Its divisions are organized as profit centres. Patterson uses static budgets to evaluate its profit centre managers. The following report was prepared for the profit centre manager, Frank Lee, of the home security division Patterson Ltd Home security division Responsibility report for the year ended December 31, 2020 Actual Budgeted Difference Sales in units 3,500 4,000 500U Sales revenue $2,128,000 $2,400,000 $272,000U Less: all expenses Variable cost of goods sold 1,050,000 $1,240,000 190,000F Variable selling & admin expenses 297,500 328,000 30,500F Controllable fixed cost of goods sold 270,000 270,000 On target Controllable fixed selling and admin 140,000 130,000 10,000U Allocated head office costs 80,000 75,000 5,000 U Total operating profit 290,500 357,000 66,500U U=unfavorable; F= favourable Required (a) (8 marks) After seeing the report, Frank was worried that his job would be at risk because of the poor operating profit performance of his centre. You want to help Frank. Prepare a responsibility report for the home security division that reflects what we have learned in class about how responsibility centre managers should be evaluated. How did Frank perform? (b) (2 marks) Provide two reasons why your report provides a better evaluation of his performance as a profit centre manager than that provided by the company