Chudzik Manufacturing Company makes garden and lawn equipment. The company operates through three divisions. Each division is

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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, 2012, and relevant budget data are as follows:
Chudzik Manufacturing Company makes garden and lawn equipment. The company

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 (in thousands of dollars) for the lawn mower division.
(b) Evaluate the manager's performance. Which items will likely be investigated by top management?
(c) Calculate the expected ROI in 2013 for the lawn mower division, assuming the following independent changes:
1. The variable cost of goods sold decreases by 15%.
2. The average operating assets decrease by 20%.
3. Sales increase by $500,000 and this increase is expected to increase the contribution margin by $210,000.

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: 978-1118033890

3rd Canadian edition

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

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