Fugate Company manufactures expensive watch cases sold as souvenirs. Three of its sales departments are: Retail Sales, Wholesale Sales, and Outlet Sales. The Retail Sales Department is a profit center. The Wholesale Sales Department is a cost center. Its managers merely take orders from customers who purchase through the company's wholesale catalog. The Outlet Sales Department is an investment center, because each manager is given full responsibility for an outlet store location. The manager can hire and discharge employees, purchase, maintain, and sell equipment, and in general is fairly independent of company control.

Jane Duncan is a manager in the Retail Sales Department. Richard Wayne manages the Wholesale Sales Department. Jose Lopez manages the Golden Gate Club outlet store in

San Francisco. The following are the budget responsibility reports for each of the three departments.

Instructions(a) Determine which of the items should be included in the responsibility report for each of the three managers.(b) Compare the actual results with the budget. Decide which results should be called to the attention of each manager.

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Budget Retail Wholesale Outlet Sales Sales Sales $ 750,000 $ 400,000 $200,000 Sales Variable costs Cost of goods sold Advertising Sales salaries 150,000 100,000 25,000 100,000 30,000 15,000 5,000 3,000 75,000 10,000 Printing Travel 20,000 30,000 5,000 20,000 2,000 Fixed costs Rent 50,000 30,000 10.000 Insurance 5,000 2,000 1,000 Depreciation 75,000 100,000 40,000 $1,000,000 $1,200,000 $800,000 Investment in assets Actual Results Wholesale Sales Retail Outlet Sales Sales $ 750,000 $ 400,000 $200,000 Sales Variable costs 120,000 30,000 Cost of goods sold Advertising 195,000 26,250 100,000 75,000 10,000 5,000 Sales salaries 15,000 20,000 3,000 Printing 5,000 Travel 15,000 20,000 1,500 Fixed costs Rent 40,000 50,000 12,000 1,000 60,000 $800,000 Insurance 5,000 2,000 Depreciation Investment in assets 80,000 90,000 $1,200,000 $1,000,000