Results 120,000110,000 840,000 880,000 480,000330,000 Revenue- tickets Revenue-c

Question

Results 120,000110,000 840,000 880,000 480,000330,000 Revenue- tickets Revenue-concessiOn Total Revenue Controllable variable costs 1,320,000 1,210,000 Concessions Direct labor Variable overhead (120,000) (99,000) (420,000) (330,000) (540,000) (550,000) 240,000 231,000 Contribution margin Controllable fixed costs Rent Other administrative expenses Theater operating income (55,000) (55,000) (45,000) (50,000) 140,000 126,000 INSTRUCTIONS: L. Assuming that the theaters are profit centers, prepare a performance report for the Park results, the Theater. Include a flexible budget. Determine the variances between actual and the master budget. lexible Evaluate Carter's performance as manager of the Park Theater. theaters are thus investment centers. Park Theater is expected to generate a desired RO .Assume that t the managers are assigned responsibility for capital expenditures of at least 6% on average assets invested of $2,000,000. a. Compute the theater's return on investment and residual income. b. Using the ROI and residual income, evaluate Carter's performance as a manager Compare actual performance to the flexible budget and the master budget

Explanation / Answer

Actual Flexible budget variance Flexible budget Volume variance Planning budget Per unit cost Tickets sold 110000 110000 120000 Revenue tickets 880000 110000 F 770000 70000 U 840000 7 Revenue concessions 330000 110000 U 440000 40000 U 480000 4 Total revenue 1210000 1210000 1320000 11 Variable expense Concessions 99000 11000 F 110000 10000 F 120000 1 Direct labor 330000 55000 F 385000 35000 F 420000 3.5 Variable overheads 550000 55000 U 495000 45000 F 540000 4.5 Total variable expense 979000 11000 F 990000 90000 F 1080000 9 Contribution margin   231000 11000 F 220000 20000 U 240000 2 Fixed expense Rent 55000 0 55000 0 55000 Other administrative expense 50000 5000 U 45000 0 45000 Total fixed expense 105000 100000 100000 Net operating income 126000 6000 F 120000 -20000 F 140000

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