Dinkle Manufacturing Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is
Dinkle Manufacturing Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2010, and relevant budget data are as follows.
Average operating assets for the year for the Home Division were $2,500,000 which was also the budgeted amount.
(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) Compute the expected ROI in 2011 for the Home Division, assuming the following independent changes to actual data.
(1) Variable cost of goods sold is decreased by 6%.
(2) Average operating assets are decreased by 10%.
(3) Sales are increased by $200,000, and this increase is expected to increase contribution margin by $90,000.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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