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Problem 22-5A (Part Level Submission)

Optimus 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, 2017, and relevant budget data are as follows.

		Actual		Comparison with Budget
Sales		$1,399,000		$101,000	favorable
Variable cost of goods sold		676,000		56,000	unfavorable
Variable selling and administrative expenses		124,000		25,000	unfavorable
Controllable fixed cost of goods sold		171,000		On target
Controllable fixed selling and administrative expenses		81,000		On target

Average operating assets for the year for the Home Division were $1,999,000 which was also the budgeted amount.

Answer 1

Ans:

Optimus Company
Home Division
Responsibility Report
For the Year ended December 31,2017
	Budget	Actual	Difference
			Amount	Remarks
Sales	1298000	1399000	101000	Favorable
Variable Cost of Goods Sold	620000	676000	56000	Unfavorable
Variable Selling and Administrative Expenses	99000	124000	25000	Unfavorable
Contribution Margin	579000	599000
Less : Controllable Fixed Cost of Goods Sold	171000	171000	0	Niether Favorable nor Unfavorable
Controllable Fixed Selling and Administrative Expenses	81000	81000	0	Niether Favorable nor Unfavorable
Net Operating Income (A)	327000	347000
Operating Assets (B)	1999000	1999000	0	Niether Favorable nor Unfavorable
ROI (A)/(B)	16.36%	17.36%	1.00%	Favorable

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