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Suppan Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for
Suppan 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, 2014, and relevant budget data are as follows. Sales Variable cost of goods sold Variable selling and Controllable fixed cost of goods sold Controllable fixed selling and administrative expenses $1,400,590 $100,810 favorable 675,760 54,190 unfavorable 124,850 24,330 unfavorable 170,390 On target 79,270 On target Average operating assets for the year for the Home Division were $1,999,490 which was also the budgeted amount. 1. Prepare a responsibility report for the Home Division. (List variable costs before fixed costs Round R01 to 1 decimal place, e.g. 1.S%) 2. Compute the expected ROI in 2014 for the Home Division, assuming the following independent changes to actual data. (Round Ro to 1 decimal place, e.g. 1.5%) 1) Variable cost of goods sold is decreased by 5% 2) Average operating assets are decreased by 11% 3) Sales are increased by $199.240, and this increase is expected to increase contribution margin by $85.820 IF
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