EBK ACCOUNTING PRINCIPLES
EBK ACCOUNTING PRINCIPLES
13th Edition
ISBN: 9781119411017
Author: Weygandt
Publisher: WILEY
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Chapter 25, Problem 16E

a

To determine

Introduction:

The responsibility report prepared by the management determines the contribution margin and controllable margin. Here, the contribution margin is computed by subtracting variable costs from revenue, and the controllable margin is computed by subtracting controllable fixed costs from the contribution margin.

To prepare: The responsibility report.

b

To determine

Introduction:

ROI is the formula for determining the percentage of return to be earned from a particular operation. Investors use this formula to evaluate the profitability of their investments.

To calculate: The ROI.

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C. The Motorcycle Division of Maliha Co. is operated as a profit center. Sales for the division were budgeted for 2020 at $1,250,000. The only variable costs budgeted for the division were cost of goods sold ($610,000) and selling and administrative ($80,000). Fixed costs were budgeted at $130,000 for cost of goods sold, $120,000 for selling and administrative and $95,000 for noncontrollable fixed costs. Actual results for these items were: Sales $1,175,000 Cost of goods sold Variable 545,000 Fixed 140,000 Selling and administrative Variable 82,000 Fixed 100,000 Noncontrollable fixed 105,000 Instructions (a) Prepare a responsibility report for the Motorcycle Products Division for 2020. (b) Assume the division is an investment center, and average operating assets were $1,200,000. Compute ROI.
The sports equipment division of Kevin Hall Company is operated as a profit centre. Sales for the division were budgeted for 2022 at $896,000. The only variable costs budgeted for the division were cost of goods sold ($442,000) and selling and administrative costs ($64,000). Fixed costs were budgeted at $102,000 for cost of goods sold, $92,000 for selling and administrative costs, and $75,000 for noncontrollable fixed costs. Actual results were as follows: Sales $864,000 Cost of goods sold Variable 416,000 Fixed 106,000 Selling and administrative costs Variable 65,000 Fixed 73,000 Noncontrollable fixed costs 91,000 Assume the division is an investment centre, and average operating assets were $1,000,000. What is ROI?
The Real Estate Products Division of Ivanhoe Co. is operated as a profit center. Sales for the division were budgeted for 2022 at $1,260,000. The only variable costs budgeted for the division were cost of goods sold ($618,000) and selling and administrative ($84,000). Fixed costs were budgeted at $136,000 for cost of goods sold, $126,000 for selling and administrative costs, and $99,000 for noncontrollable fixed costs. Actual results for these items were as follows: Sales Cost of goods sold Variable Fixed $1,187,572 551,000 150,000 Selling and administrative Variable Fixed 90,000 104,000 Noncontrollable fixed 109,000 Prepare a responsibility report for the Real Estate Products Division for 2022. (List variable costs before fixed costs.) IVANHOE CO. Real Estate Products Division Responsibility Report 2022 Budget $ $ Actual $ Difference Favorable (F) Unfavorable (U) Not Applicable (NA

Chapter 25 Solutions

EBK ACCOUNTING PRINCIPLES

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