Chapter 10, Problem 10.4AP

Clarke Inc. operates the Patio Furniture Division as a profit center. Operating data for this division for the year ended December 31, 2017, are as shown below.

	Budget	Difference from Budget
Sales	$2,500,000	$50,000 F
Cost of goods sold Variable	l,300,000	41,000 F
Controllable fixed	200,000	3,000 U
Selling and administrative Variable	220,000	6,000 U
Controllable fixed	50,000	2,000 U
Noncontrollable fixed costs	70,000	4,000 U

In addition. Clarke incurs $180,000 of indirect fixed costs that were budgeted at $175,000. Twenty percent (20%) of these costs are allocated to the Patio Furniture Division.

Instructions

(a) Prepare a responsibility report for the Patio Furniture Division for the year.

(b) Comment on the managers performance in controlling revenues and costs.

(c) Identify any costs excluded from the responsibility report and explain why they were excluded.