Al-Hazim Company specializes in cleaning services for home and business. The own

Question

Al-Hazim Company specializes in cleaning services for home and business. The owner has asked you to help him create a performance reporting system that will allow him to measure the financial performance of the two divisions in the company, namely the Home Cleaning Division and the Business Cleaning Division. The following information has been collected on the Business Cleaning Division for the first quarter of 2015: The following information was also provided: The property taxes and insurance are common fixed costs allocated to the two divisions. The salaries of the division's supervisors are fully determined by the respective divisional manager. Thirty percent (30%) of the budgeted depreciation was related to the special equipment used by the division while the remaining balance was allocated portion of company's building depreciation. As part of the divisional marketing efforts, the division promoted their cleaning services to nearby companies through flyers and banners. The divisional manager has full authority in deciding the amount to be spent for this purpose. In the budget data above, this cost represents one-third of the advertisement costs.

Explanation / Answer

Al-Hazim Company Business Cleaning Division Responsibility Report For the First Quarter, 2105 Budget Actual Difference Service Revenues             510,000              490,000      20,000 U Less: Variable Expenses Material & Supplies                31,000                34,000         3,000 U Wages                16,500                16,900            400 U Gas & Oil                  3,600                  3,300            300 F Total Variable Costs                51,100                54,200         3,100 U Contribution             458,900              435,800      23,100 U Less: Fixed Expenses Property Taxes                  7,900                  5,300         2,600 F Insurance                  4,200                  2,700         1,500 F Supervisor Salaries                29,500                26,000         3,500 F Special Equipment - Dep                  4,290                  4,290                -   Building - Dep                10,010                10,010                -   Divisional Flyer & Banner Advt.                  2,300                  2,500            200 U Other Advt.                  4,600                  3,300         1,300 F Total Fixed Cost                62,800                54,100         8,700 F Divisional Net income             396,100              381,700      14,400 U

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