The sports equipment division of Brandon McCarthy Company is operated as a profit centre. Sales for the division were budgeted for 2012 at $900,000. The only variable costs budgeted for the division was cost of goods sold ($440,000) and selling and administrative costs ($60,000). Fixed costs were budgeted at $100,000 for cost of goods sold, $90,000 for selling and administrative costs, and $70,000 for non-controllable fixed costs. Actual results were as follows:
Sales.......................................$870,000
Cost of goods sold
Variable....................................405,000
Fixed.......................................105,000
Selling and administrative costs
Variable.....................................62,000
Fixed........................................78,000
Non-controllable fixed costs.............80,000
Instructions
(a) Prepare a responsibility report for the sports equipment division for 2012.
(b) Assume the division is an investment centre, and average operating assets were $1 million. Calculate ROI