Chudzik Manufacturing Company makes garden and lawn equipment. The company operates through three divisions. Each division is
Question:
Chudzik Manufacturing Company makes garden and lawn equipment. The company operates through three divisions. Each division is an investment centre. Operating data for the lawn mower division for the year ended December 31, 2022, and relevant budget data are as follows:
Average operating assets for the year for the lawn mower division were $5 million, which was also the budgeted amount.
Instructions
a. Prepare a responsibility report for the lawn mower division.
b. Evaluate the manager’s performance. Which items will likely be investigated by top management?
c. Calculate the ROI in 2022 for the lawn mower division, assuming the following independent changes:
1. The variable cost of goods sold decreases by 20%.
2. The average operating assets decrease by 24%.
3. Sales increase by $700,000 and this increase is expected to increase the contribution margin by $260,000.
Step by Step Answer:
Managerial Accounting Tools For Business Decision Making
ISBN: 9781119731825
6th Canadian Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Ibrahim M. Aly, Donald E. Kieso