Exercise 22-15 (part level submission) Deitz Inc. has three divisions which are
ID: 2473201 • Letter: E
Question
Exercise 22-15 (part level submission)
Deitz Inc. has three divisions which are operated as profit centers. Actual operating data for the divisions are listed below.
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(a)
Operating Data
Women’s Shoes
Men’s Shoes
Children’s Shoes
Contribution margin
$250,000
$180,000
Controllable fixed costs
100,000
Controllable margin
90,000
95,000
Sales
600,000
450,000
Variable costs
320,000
250,000
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(b)
DEITZ INC.
Women’s Shoe Division
Responsibility Report
For the Month Ended June 30, 2014
Difference
Budget
Actual
Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)
Exercise 22-15 (part level submission)
Deitz Inc. has three divisions which are operated as profit centers. Actual operating data for the divisions are listed below.
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Explanation / Answer
a) Computation of missing amounts
(1) Controllable Margin = Contribution Margin - Controllable Fixed Costs = $250,000 - $100,000 = $150,000
(2) Variable Costs = Sales - Contribution Margin = $600,000 - $250,000 = $350,000
(3) Contribution Margin = Sales - Variable Cost = $450,000 - $320,000 = $130,000
(4) Controllable Fixed Costs = Contribution Margin - Controllable Margin = $130,000 - $90,000 = $40,000
(5) Controllable Fixed Costs = Contribution Margin - Controllable Margin = $180,000 - $95,000 = $85,000
(6) Sales = Contribution Margin + Variable Costs = $180,000 + $250,000 = $430,000
(b) Responsibility report for the women's shoe division:
DEITZ INC.
Women’s Shoe Division
Responsibility Report
For the Month Ended June 30, 2014
Favorable F
Unfavorable U
Neither Favorable nor Unfavorable N
Difference Budget $ Actual $Favorable F
Unfavorable U
Neither Favorable nor Unfavorable N
Sales 600,000 600,000 0 N Variable Costs 350,000 360,000 $10,000 U Contribution Margin 250,000 240,000 $10,000 U Controllable Fixed Costs 100,000 100,000 0 N Controllable Margin 150,000 140,000 $10,000 NRelated Questions
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