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The Dinkle and Frizell Dental Clinic provides both preventive and orthodontic dental services. The two owners, Reese Dinkle and Anita Frizell, operate the clinic as

The Dinkle and Frizell 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 efficiency and profitability of the clinic. Recently, they have been concerned about the profitability of the Preventive Services operations. For several months, it has been reporting a loss. The responsibility report for the month of May 2020 is shown below.

Actual

Difference from Budget

Service revenue $40,930 $1,160 Favorable
Variable costs:
Filling materials 4,910 110 Unfavorable
Novocain 4,090 110 Unfavorable
Supplies 1,860 400 Favorable
Dental assistant wages 2,580 0 Neither Favorable nor Unfavorable
Utilities 550 90 Unfavorable
Total variable costs 13,990 90 Favorable
Fixed costs:
Allocated portion of receptionists salary 3,110 180 Unfavorable
Dentist salary 9,760 520 Unfavorable
Equipment depreciation 6,110 0 Neither Favorable nor Unfavorable
Allocated portion of building depreciation 15,170 1,260 Unfavorable
Total fixed costs 34,150 1,960 Unfavorable
Operating income (loss) $(7,210 ) $710 Unfavorable

In addition, the owners know that the investment in operating assets at the beginning of the month was $81,900, and it was $73,640 at the end of the month. They have asked for your assistance in evaluating their current performance reporting system. Prepare an investment center responsibility report for the Preventative Services segment for May 2020. (Round ROI to 1 decimal place, e.g. 1.5%.)

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