The Bramble Dental Clinic provides both preventive and orthodontic dental services. The two owners, Reese Dinkle and Anita Frizell, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the centers: Reese for Preventive Services and Anita for Orthodontic Services. Each month, they prepare an income statement for the two centers to evaluate performance and make decisions about how to improve the operational efficiency and profitability of the clinic. Recently, they have been concerned about the profitability of the Preventive Services operations. For several months, it has been reporting a loss. The responsibility report for the month of May 2017 is shown below. Actual Difference from Budget Service revenue $39,000 $900 Favorable Variable costs: Filling materials 4,000 110 Unfavorable Novocain 4,100 90 Unfavorable Supplies 2,100 340 Favorable Dental assistant wages 2,800 –0– Neither Favorable nor Unfavorable Utilities 600 100 Unfavorable Total variable costs 13,600 40 Favorable Fixed costs: Allocated portion of receptionist’s salary 2,900 200 Unfavorable Dentist salary 8,900 236 Unfavorable Equipment depreciation 5,852 –0– Neither Favorable nor Unfavorable Allocated portion of building depreciation 16,000 900 Unfavorable Total fixed costs 33,652 1,336 Unfavorable Operating income (loss) $(8,252 ) $396 Unfavorable In addition, the owners know that the investment in operating assets at the beginning of the month was $90,600, and it was $85,400 at the end of the month. They have asked for your assistance in evaluating their current performance reporting system.
The Bramble Dental Clinic provides both preventive and orthodontic dental services. The two owners, Reese Dinkle and Anita Frizell, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the centers: Reese for Preventive Services and Anita for Orthodontic Services. Each month, they prepare an income statement for the two centers to evaluate performance and make decisions about how to improve the operational efficiency and profitability of the clinic. Recently, they have been concerned about the profitability of the Preventive Services operations. For several months, it has been reporting a loss. The responsibility report for the month of May 2017 is shown below. Actual Difference from Budget Service revenue $39,000 $900 Favorable Variable costs: Filling materials 4,000 110 Unfavorable Novocain 4,100 90 Unfavorable Supplies 2,100 340 Favorable Dental assistant wages 2,800 –0– Neither Favorable nor Unfavorable Utilities 600 100 Unfavorable Total variable costs 13,600 40 Favorable Fixed costs: Allocated portion of receptionist’s salary 2,900 200 Unfavorable Dentist salary 8,900 236 Unfavorable Equipment depreciation 5,852 –0– Neither Favorable nor Unfavorable Allocated portion of building depreciation 16,000 900 Unfavorable Total fixed costs 33,652 1,336 Unfavorable Operating income (loss) $(8,252 ) $396 Unfavorable In addition, the owners know that the investment in operating assets at the beginning of the month was $90,600, and it was $85,400 at the end of the month. They have asked for your assistance in evaluating their current performance reporting system.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 2
The Bramble Dental Clinic provides both preventive and orthodontic dental services. The two owners, Reese Dinkle and Anita Frizell, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the centers: Reese for Preventive Services and Anita for Orthodontic Services. Each month, they prepare an income statement for the two centers to evaluate performance and make decisions about how to improve the operational efficiency and profitability of the clinic.
Recently, they have been concerned about the profitability of the Preventive Services operations. For several months, it has been reporting a loss. The responsibility report for the month of May 2017 is shown below.
In addition, the owners know that the investment in operating assets at the beginning of the month was $90,600, and it was $85,400 at the end of the month. They have asked for your assistance in evaluating their current performance reporting system.
Recently, they have been concerned about the profitability of the Preventive Services operations. For several months, it has been reporting a loss. The responsibility report for the month of May 2017 is shown below.
|
Actual
|
Difference
from Budget |
|||||
| Service revenue | $39,000 | $900 | Favorable | |||
| Variable costs: | ||||||
| Filling materials | 4,000 | 110 | Unfavorable | |||
| Novocain | 4,100 | 90 | Unfavorable | |||
| Supplies | 2,100 | 340 | Favorable | |||
| Dental assistant wages | 2,800 | –0– | Neither Favorable nor Unfavorable | |||
| Utilities | 600 | 100 | Unfavorable | |||
| Total variable costs | 13,600 | 40 | Favorable | |||
| Fixed costs: | ||||||
| Allocated portion of receptionist’s salary | 2,900 | 200 | Unfavorable | |||
| Dentist salary | 8,900 | 236 | Unfavorable | |||
| Equipment |
5,852 | –0– | Neither Favorable nor Unfavorable | |||
| Allocated portion of building depreciation | 16,000 | 900 | Unfavorable | |||
| Total fixed costs | 33,652 | 1,336 | Unfavorable | |||
| Operating income (loss) | $(8,252 | ) | $396 | Unfavorable |
In addition, the owners know that the investment in operating assets at the beginning of the month was $90,600, and it was $85,400 at the end of the month. They have asked for your assistance in evaluating their current performance reporting system.
Transcribed Image Text:(a)
Prepare a responsibility report for an investment center as illustrated in the chapter. (Round ROI to 1 decimal place, e.g. 1.5.)
BRAMBLE DENTAL CLINIC
Preventive Services
Responsibility Report
Difference
Favorable F
Unfavorable U
Neither Favorable
nor Unfavorable N
Budget
Actual
$
$
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>
Transcribed Image Text:Return on investment
%
%
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