ycconuubou25.SA (LO 4) Optimus Company manufactures a variety of tools and industrial equipment. The com-any operates through three divisions. Each division is an investment center. Operating data for theome Division for the year ended December 31, 2020, and relevant budget data are as follows.DobActualComparison with Budget$1,400,000665,000125,000170,000$100,000 favorable45,000 unfavorable25,000 unfavorableOn targetSalesVariable cost of goods soldVariable selling and administrative expensesControllable fixed cost of goods soldControllable fixed selling and administrativeOn targetexpensesAverage operating assets for the year for the Home Division were $2,000,000 which was also the bud-geted amount.Instructionsa. Prepare a responsibility report (in thousands of dollars) for the Home Division.b. Evaluate the manager's performance. Which items will likely be investigated by top management?c. Compute the expected ROI in 2020 for the Home Division, assuming the following independentchanges to actual data.1. Variable cost of goods sold is decreased by 5%.2. Average operating assets are decreased by 10%.3. Sales are increased by $200,000, and this increase is expected to increase contribution marginby $80,000.P25.6A (LO 3) Durham Company uses a responsibility reporting system. It has divisions in DenveSeatle, and San Diego. Each division has three production departments: Cutting, Shaping, and Finis!ing The responsibility for each department rests with a manager who reports to the division producticmanager. Each division manager reports to the vice president of production. There are also vice predents for marketing and finance. All vice presidents report to the president.In January 2020, controllable actual and budget manufacturing overheadments and divisions were as shown below

ROI (return on investment) - Return on investment can be defined as the ratio between net income…

$100,000 favorable 45,000 unfavorable 25,000 unfavorable On target $1,400,000 665,000 Sales Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative 125,000 170,000 expenses 80,000 On target 00 O uoroge onerating assets for the year for the Home Division were $2,000,000 which was also the bud-

$100,000 favorable 45,000 unfavorable 25,000 unfavorable On target $1,400,000 665,000 Sales Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative 125,000 170,000 expenses 80,000 On target 00 O uoroge onerating assets for the year for the Home Division were $2,000,000 which was also the bud-

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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Sales revenue Variable costs: Production Administrative Contribution margin Fixed costs Operating profit Status Quo 45,000 Units $ 1,170,000.0 X S $ $ GA 607,500 X 112,500 X 45,000.0 X $ 292,500.0 X 63,000.0 X S Costs and Revenues (Thousands of Dollars) Alternative 55,000 Units 1,370,000.0 $ 200,000.0 higher Difference 742,500 X 135,000 higher 112,500 X none 515,000.0 $ 65,000.0 higher 292,500.0 X none 128,000.0 $ 65,000.0 higher Required B > < Required A