Strauss Manufacturing Company manufactures a variety of garden and lawn equipment. The company operates through three divisions.
Question:
Strauss 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, 2012, and relevant budget data are as follows.
Average operating assets for the year for the Lawnmower Division were $5,000,000, which was also the budgeted amount.
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 2013 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$210,000.
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...
Step by Step Answer:
Accounting Tools for business decision making
ISBN: 978-0470095461
4th Edition
Authors: kimmel, weygandt, kieso