Chapter 10, Problem 10.16E

The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $900,000. The only variable costs budgeted for the division were 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 noncontrollable fixed costs. Actual results for these items were:

Sales	$880,000
Cost of goods sold Variable	408,000
Fixed	105,000
Selling and administrative Variable	61,000
Fixed	66,000
Noncontrollable fixed	90.000

Instructions

(a) Prepare a responsibility report for the Sports Equipment Division for 2017.

(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.