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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
P10-5A Suppan Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operat- ing data for the Home Division for the year ended December 31, 2014, and relevant budget data are as follows.
Â
Actual        Comparison with Budget
                  ![]()
Sales                                                                              $1,400,000          $100,000 favorable
Â
|
Variable cost of goods sold |
675,000 |
55,000 unfavorable |
|
Variable selling and administrative expenses |
125,000 |
25,000 unfavorable |
|
Controllable fixed cost of goods  sold |
170,000 |
On target |
|
Controllable fixed selling and administrative |
 |
 |
|
expenses |
80,000 |
On target |
Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount.
Instructions
(a)Â Prepare a responsibility report (in thousands of dollars) for the Home Division.
(b) Evaluate the manager’s performance. Which items will likely be investigated by top management?
(c)Â Â Compute the expected ROI in 2014 for the Home Division, assuming the following independent changes to actual data.
(1)Â Â Variable cost of goods sold is decreased by 5%.
(2)Â Â Average operating assets are decreased by 10%.
(3)Â Â Sales are increased by $200,000, and this increase is expected to increase contri- bution margin by $85,000.
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