Alosio Manufacturing Company manufactures a variety of tools and industrial equipment. The company operates three divisions. Each

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Alosio Manufacturing Company manufactures a variety of tools and industrial equipment. The company operates three divisions. Each division is an investment centre. Operating data for the home division for the year ended December 31, 2016, and relevant budget data are as follows:
Alosio Manufacturing Company manufactures a variety of tools and industrial

Average operating assets for the year for the home division were $2 million, which was also the budgeted amount.
Instructions
(a) 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) Calculate the expected ROI in 2017 for the home division, assuming the following independent changes to actual data:
1. The variable cost of goods sold decrease by 5%.
2. The average operating assets decrease by 10%.
3. Sales increase by $200,000, and this increase is expected to increase the contribution margin by $85,000.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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Related Book For  book-img-for-question

Managerial Accounting Tools for Business Decision Making

ISBN: 978-1118856994

4th Canadian edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

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