P11.53B (LO 3) Henning Manufacturing Ltd. operates its patio furniture division as a profit centre....
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Accounting
P11.53B(LO 3) Henning Manufacturing Ltd. operates its patio furniture division as a profit centre. Operating data for this division for the year ended December 31, 2022, are as follows:
Budget
Difference from Budget
Sales
$2,500,000
$60,000 F
Costs of goods sold
Variable costs
1,300,000
41,000 F
Controllable fixed costs
200,000
6,000 U
Selling and administrative expenses
Variable costs
220,000
7,000 U
Controllable fixed costs
50,000
2,000 U
Noncontrollable fixed costs
70,000
4,000 U
In addition, Henning Manufacturing incurred $180,000 of indirect fixed costs that were budgeted at $175,000. It allocates 20% of these costs to the patio furniture division. The division manager cannot control any of these costs.
Instructions
Prepare a responsibility report for the patio furniture division for the year.
a. Controllable margin: $86,000 F
Comment on the managers performance in controlling revenues and costs.
Identify any costs that have been excluded from the responsibility report and explain why they were excluded.
Prepare a responsibility report for an investment centre, and calculate ROI.
Answer & Explanation
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