Exercise 22-16 (Part Level Submission) The Sports Equipment Division of Harringt

Question

Exercise 22-16 (Part Level Submission)

The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $904,930. The only variable costs budgeted for the division were cost of goods sold ($441,160) and selling and administrative ($62,530). Fixed costs were budgeted at $100,550 for cost of goods sold, $93,740 for selling and administrative, and $74,730 for noncontrollable fixed costs. Actual results for these items were:

(b)

Assume the division is an investment center, and average operating assets were $1,114,200. The noncontrollable fixed costs are controllable at the investment center level. Compute ROI. (Round ROI to 1 decimal place, e.g. 1.5.)

Sales $883,910 Cost of goods sold        Variable 414,930        Fixed 106,530 Selling and administrative        Variable 60,880        Fixed 72,660 Noncontrollable fixed 94,690

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer    Statementshowing Computations Paticulars Amount Sales       883,910.00 Less Variable Expenses: Variable cost of goods sold     (414,930.00) Variable selling and admin       (60,880.00) Total Variable costs     (475,810.00) Contribution Margin       408,100.00 Fixed cost Fixed cost of goods sold     (106,530.00) Fixed selling and admin       (72,660.00) Controllable fixed costs       (94,690.00) Total Fixed costs     (273,880.00) Net operating income       134,220.00 Average operating assets 1,114,200.00 Return on investment = 134,220/1114,200 12.05%

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