Ayayai Inc. operates the Patio Furniture Division as a profit center. Operating data for this division for the year ended December 31, 2022, are shown here. Budget Differencefrom BudgetSales $2,490,000 $45,000FavorableCost of goods sold Variable 1,290,000 36,000Favorable Controllable fixed 190,000 2,000UnfavorableSelling and administrative Variable 210,000 6,000Unfavorable Controllable fixed 45,000 1,000UnfavorableNoncontrollable fixed costs 65,000 3,000UnfavorableIn addition, Ayayai incurs $175,000 of indirect fixed costs that were budgeted at $170,000. Twenty percent (20%) of these costs are allocated to the Patio Furniture Division.Prepare a responsibility report for the Patio Furniture Division for the year. (List variable costs before fixed costs.)

The responsibility report only includes those costs that can be affected by the decision of the…

Answered: Ayayai Inc. operates the Patio…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ayayai Inc. operates the Patio Furniture Division as a profit center. Operating data for this division for the year ended December 31, 2022, are shown here.

	Budget	Difference from Budget
Sales	$2,490,000	$45,000	Favorable
Cost of goods sold
Variable	1,290,000	36,000	Favorable
Controllable fixed	190,000	2,000	Unfavorable
Selling and administrative
Variable	210,000	6,000	Unfavorable
Controllable fixed	45,000	1,000	Unfavorable
Noncontrollable fixed costs	65,000	3,000	Unfavorable

In addition, Ayayai incurs $175,000 of indirect fixed costs that were budgeted at $170,000. Twenty percent (20%) of these costs are allocated to the Patio Furniture Division.

Prepare a responsibility report for the Patio Furniture Division for the year. (List variable costs before fixed costs.)

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