Jeffery Manufacturing Company manufactures a variety of garden and lawn equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Lawnmower Division for the year ended December 31, 2010, and relevant budget data are as follows.

Instructions:

(a) Prepare a responsibility report (in thousands of dollars) for the Lawnmower Division.

(b) Evaluate the manager's performance. Which items will likely be investigated by top management?

(c) Compute the expected ROI in 2011 for the Lawnmower Division, assuming the following independent changes.
(1) Variable cost of goods sold is decreased by \(15 \%\).
(2) Average operating assets are decreased by \(20 \%\).
(3) Sales are increased by \(\$ 500,000\) and this increase is expected to increase contribution margin by \(\$ 200,000\).

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Sales Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative Actual Comparison with Budget $2,800,000 1,400,000 $150,000 unfavorable 80,000 unfavorable 300,000 50,000 favorable 270,000 On target 130,000 On target expenses Average operating assets for the year for the Lawnmower Division were $5,000,000 which was also the budgeted amount.