Optimus Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an
Average operating assets for the year for the Home Division were $2,000,000 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 2017 for the Home Division, assuming the following independent changes to actual data.
(1) Variable cost of goods sold is decreased by 5%.
(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 $80,000.
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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Chapter # 24- Budgetary Control and Responsibility Accounting
Section: Problem Set A
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Question Posted: March 02, 2015 10:31:57