Exercise 24-16 Harrington Company is operated as a profit center. Sales for the

Question

Exercise 24-16 Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $893,520. The only varilable costs were cost of goods sold ($441,750) and selling and administrative ($60,200). Fixed costs were budgeted at $100,280 for cost of goods sold, budgeted for the division $94,240 for selling and administrative, and $72,370 for noncontrollable fixed costs. Actual resulits for these items were Sales Cost of goods sold $886,870 Variable Fixed 409,600 106,760 Selling and administrative Variable Fixed 64,980 1,760 89,330 fxed

Explanation / Answer

Actual profit = Actual controllable margin - non controllable fixed cost Actual controllable margin sales 886,870 less variable cost variable cost of goods sold 409,600 variable selling & adm 64,980 total variable cost 474,580 Contribution margin 412,290 less:Fixed c0st fixed cost of goods sold 106,760 fixed selling & Adm 71,760 total fixed cost 178,520 controllable margin 233,770 Actual profit = 233,770 -89,330 144,440 Return on investment = 144,440/1080400 13.4% answer

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