The Sports Equipment Division of Brandon McCarthy Company is operated as a profi

Question

The Sports Equipment Division of Brandon McCarthy Company is operated as a profit center. Sales for the division were budgeted for 2008 at $900,000. The only variable costs budgeted for the division were cost of goods sold ($440,000) and selling and administrative ($60,000). Fixed costs were budgeted at $100,000 for cost of goods sold, $90,000 for selling and administrative and $70,000 for noncontrollable fixed costs. Actual results for these items were:

Sales $880,000
Cost of goods sold
Variable 409,000
Fixed 105,000
Selling and administrative
Variable 61,000
Fixed 67,000
Noncontrollable fixed 80,000


Prepare a responsibility report for the Sports Equipment Division for 2008.

BRANDON McCARTHY COMPANY
Sports Equipment Division
Responsibility Report

2008


Budget


Actual
Difference
Sales $ $ $
Variable costs
Cost of goods sold
Selling and administrative






Total






Contribution margin
Controllable fixed costs
Cost of goods sold
Selling and administrative






Total






Controllable margin

$


$


$




Assume the division is an investment center, and average operating assets were $1,000,000. Compute ROI. (Round answer to 1 decimal place, e.g. 10.5.)

%




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Explanation / Answer

BRANDON McCARTHY COMPANY Sports Equipment Division Responsibility Report. Budgeted Actual Difference Rating Sales 900000 880000 -20000 Favorable Variable Costs: Cost of goods sold 440000 409000 -31000 Favorable Selling & Administrative Exp 60000 61000 1000 unfavorable Total Variable cost 500000 470000 -30000 Favorable Contribution margin 400000 410000 10000 unfavorable Fixed Costs: Cost of goods sold 100000 105000 5000 unfavorable Selling & Administrative Exp 90000 67000 -23000 Favorable Total Fixed Costs 190000 172000 -18000 Favorable Total Costs: 690000 642000 -48000 Favorable Income 210000 238000 28000 Favorable BRANDON McCARTHY COMPANY Sports Equipment Division Responsibility Report. Budgeted Actual Difference Rating Sales 900000 880000 -20000 Favorable Variable Costs: Cost of goods sold 440000 409000 -31000 Favorable Selling & Administrative Exp 60000 61000 1000 unfavorable Total Variable cost 500000 470000 -30000 Favorable Contribution margin 400000 410000 10000 unfavorable Fixed Costs: Cost of goods sold 100000 105000 5000 unfavorable Selling & Administrative Exp 90000 67000 -23000 Favorable Total Fixed Costs 190000 172000 -18000 Favorable Total Costs: 690000 642000 -48000 Favorable Income 210000 238000 28000 Favorable Sales 900000 880000 -20000 Unfavorable Cost of Goods Sold: Variable 440000 409000 -31000 Favorable Fixed 100000 105000 5000 Unfavorable 540000 514000 -26000 Favorable Selling & administrative exp: Variable 60000 61000 1000 Unfavorable Fixed 90000 67000 -23000 Favorable 150000 128000 -22000 Favorable Non controllable Fixed expenses 70000 80000 10000 Unfavorable Controllable Fixed Expenses 120000 92000 -28000 Favorable Thank you....    BRANDON McCARTHY COMPANY Sports Equipment Division Responsibility Report. Budgeted Actual Difference Rating Sales 900000 880000 -20000 Favorable Variable Costs: Cost of goods sold 440000 409000 -31000 Favorable Selling & Administrative Exp 60000 61000 1000 unfavorable Total Variable cost 500000 470000 -30000 Favorable Contribution margin 400000 410000 10000 unfavorable Fixed Costs: Cost of goods sold 100000 105000 5000 unfavorable Selling & Administrative Exp 90000 67000 -23000 Favorable Total Fixed Costs 190000 172000 -18000 Favorable Total Costs: 690000 642000 -48000 Favorable Income 210000 238000 28000 Favorable

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