Question
Toy Philippines sells baby baskets as one of their product lines. Operating data of this product line for the year ended December 31, 2022 are
Toy Philippines sells baby baskets as one of their product lines. Operating data of this product line for the year ended December 31, 2022 are as follows:
In addition, Toy Philippines incurs P180,000 of indirect fixed costs that were budgeted at P175,000. Twenty percent of these costs are allocated to the baby basket product line. The approved budget of baby basket product line is computed at 50,000 units sold while the actual performance is 51,000 units sold.
REQUIREMENT: 1. Comment on the presentation being provided in comparing the budget versus the actual results. Explain thoroughly and recast the presentation (if needed). 2. Prepare a responsibility report for baby basket product line. 3. Suppose baby basket as a product line is an investment center. The baby basket product line has an average operating asset of P1,800,000 and the acceptable overall return of Toy Philippines is 20%. Compute the return on investment of baby basket product line and explain the implications when evaluating the performance.
\begin{tabular}{|l|r|r|} \hline & Budget & DifferencefromBudget \\ \hline Sales & P2,500,000 & P50,000 F \\ \hline Cost of Goods Sold & & \\ \hline Variable & 1,800,000 & 41,000F \\ \hline Controllable Fixed & 200,000 & 3,000U \\ \hline Selling and Administrative & & \\ \hline Variable & 220,000 & 6,000U \\ \hline Controllable Fixed & 50,000 & 2,000U \\ \hline Noncontrollable Fixed Cost & 70,000 & 4,000U \\ \hline \end{tabular} \begin{tabular}{|l|r|r|} \hline & Budget & DifferencefromBudget \\ \hline Sales & P2,500,000 & P50,000 F \\ \hline Cost of Goods Sold & & \\ \hline Variable & 1,800,000 & 41,000F \\ \hline Controllable Fixed & 200,000 & 3,000U \\ \hline Selling and Administrative & & \\ \hline Variable & 220,000 & 6,000U \\ \hline Controllable Fixed & 50,000 & 2,000U \\ \hline Noncontrollable Fixed Cost & 70,000 & 4,000U \\ \hline \end{tabular}Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started