The Sports Equipment Division of Duncan Donnegal Company is operated as a profit center. Sales for the division were budgeted for 2011 at $900,000. The only variable costs budgeted for the division was cost of goods sold ($440,000) and selling and administrative ($60,000). Fixed costs were budgeted at $100,000 for cost of goods sold, $90,000 for selling and administrative and $70,000 for no controllable fixed costs. Actual results for these items were:
Sales ……………………… $880,000
Cost of goods sold
Variable …………………… 409,000
Fixed ………………………. 105,000
Selling and administrative
Variable …………………….. 61,000
Fixed ………………………… 67,000
Noncontrollable fixed ……… 80,000
Instructions
(a) Prepare a responsibility report for the Sports Equipment Division for 2011.
(b) Assume the division is an investment center, and average operating assets were $1,000,000. The noncontrollable fixed costs are controllable at the investment center level. Compute ROI.
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