The Ferrell Transportation Company uses a responsibility reporting system to mea
ID: 2414826 • Letter: T
Question
The Ferrell Transportation Company uses a responsibility reporting system to measure the performance of its three investment centers: Planes, Taxis, and Limos. Segment performance is measured using a system of responsibility reports and return on investment calculations. The allocation of resources within the company and the segment managers' bonuses are based in part on the results shown in these reports. Recently, the company was the victim of a computer virus that deleted portions of the company's accounting records. This was discovered when the current period's responsibility reports were being prepared. The printout of the actual operating results appeared as follows. Determine the missing pieces of information below. (Round intermediate calculations and final answers to 0 decimal places, e.g. 1,255.) Planes Taxis Limos Service revenue Variable costs Contribution margin Controllable fixed costs Controllable margin Average operating Return on investment $504,800 5,501,500 302,500 252,800 491,142 1,498,700 82,000 253,742 24,979,100 1,492,600 11% g% LINK TO TEXTExplanation / Answer
Answer
Service Revenue – Variable cost = Contribution margin.
Contribution margin – Controllable Fixed cost = Controllable margin
Controllable margin / Average Assets = Return on Investments.
Planes
Taxis
Limos
Service revenue
$ 97,47,901
$ 5,04,800
$ 7,93,642
Variable costs
$ 55,01,500
$ 2,52,000
$ 3,02,500
Contribution margin
$ 42,46,401
$ 2,52,800
$ 4,91,142
Controllable Fixed Costs
$ 14,98,700
$ 1,70,800
$ 2,37,400
Controllable margin
$ 27,47,701
$ 82,000
$ 2,53,742
Average Operating Assets
$ 249,79,100
$ 9,11,111
$ 14,92,600
Return On Investment
11%
9%
17%
Planes
Taxis
Limos
Service revenue
=4246401+5501500
504800
=302500+491142
Variable costs
5501500
=504800-252800
302500
Contribution margin
=1498700+2747701
252800
491142
Controllable Fixed Costs
1498700
=252800-82000
=491142-253742
Controllable margin
=24979100*11%
82000
253742
Average Operating Assets
24979100
=82000/9%
1492600
Return On Investment
0.11
0.09
=253742/1492600
Planes
Taxis
Limos
Service revenue
$ 97,47,901
$ 5,04,800
$ 7,93,642
Variable costs
$ 55,01,500
$ 2,52,000
$ 3,02,500
Contribution margin
$ 42,46,401
$ 2,52,800
$ 4,91,142
Controllable Fixed Costs
$ 14,98,700
$ 1,70,800
$ 2,37,400
Controllable margin
$ 27,47,701
$ 82,000
$ 2,53,742
Average Operating Assets
$ 249,79,100
$ 9,11,111
$ 14,92,600
Return On Investment
11%
9%
17%
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