Exercise 10-16 The Sports Equipment Division of Harrington Company is operated a

Question

Exercise 10-16 The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $896,710. The only variable costs budgeted for the division were cost of goods sold ($444,250) and selling and administrative ($62,420). Fixed costs were budgeted at $101,650 for cost of goods sold, $90,630 for selling and administrative, and $70,320 for noncontrollable fixed costs. Actual results for these items were: Sales $880,850 Cost of goods sold Variable Fixed 416,090 107,170 Selling and administrative Variable 64,500 69,840 94,790 Fixed Noncontrollable fixed Prepare a responsibility report for the Sports Equipment Division for 2017. (List variable costs before fixed costs.) HARRINGTON COMPANY Sports Equipment Division Responsibility Report 2017 Budget Actual Difference Unfavorable Neither Favorable nor Unfavorable to search

Explanation / Answer

Budget Actual difference Sales 896,710 880,850 15,860 F Vairbale costs cost of goods sold 444,250 416,090 28,160 U Selling and administrative 62,420 64,500 2,080 F total variable costs 506,670 480,590 26,080 U Contribution margin 390,040 400,260 10,220 U Controllable fixed costs cost of godos sold 101,650 107,170 5,520 F Selling and administrative 90,630 69,840 20,790 U total controllable fixed cost 192,280 177,010 15,270 U controllable margin 197,760 223,250 25,490 U Returon on investment = (223250-94,790)/1,138,600 11.3%

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