Question

Exercise 24-16 The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2017 at $896,200. The only variable costs budgeted for the division were cost of goods sold ($443,790) and selling and administrative ($64,300). Fixed costs were budgeted at $100,000 for cost of goods sold, $90,810 for selling and administrative, and $69,370 for noncontrollable fixed costs. Actual results for these items were: Sales $881,500 Cost of goods sold Variable 417,170 Fixed 105,050 Selling and administrative Variable 61,260 Fixed 73,650 Noncontrollable fixed 92,040 Correct answer. Your answer is correct. Prepare a responsibility report for the Sports Equipment Division for 2017. (List variable costs before fixed costs.) HARRINGTON COMPANY Sports Equipment Division Responsibility Report 2017 Budget Actual Difference Favorable Unfavorable Neither Favorable nor Unfavorable Entry field with correct answer $Entry field with correct answer 896,200 $Entry field with correct answer 881,500 $Entry field with correct answer 14,700 Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with correct answer 443,790 Entry field with correct answer 417,170 Entry field with correct answer 26,620 Entry field with correct answer Entry field with correct answer Entry field with correct answer 64,300 Entry field with correct answer 61,260 Entry field with correct answer 3,040 Entry field with correct answer Entry field with correct answer Entry field with correct answer 508,090 Entry field with correct answer 478,430 Entry field with correct answer 29,660 Entry field with correct answer Entry field with correct answer Entry field with correct answer 388,110 Entry field with correct answer 403,070 Entry field with correct answer 14,960 Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with correct answer 90,810 Entry field with correct answer 73,650 Entry field with correct answer 17,160 Entry field with correct answer Entry field with correct answer Entry field with correct answer 100,000 Entry field with correct answer 105,050 Entry field with correct answer 5050 Entry field with correct answer Entry field with correct answer Entry field with correct answer 190,810 Entry field with correct answer 178,700 Entry field with correct answer 12110 Entry field with correct answer Entry field with correct answer $Entry field with correct answer 197,300 $Entry field with correct answer 224,370 $Entry field with correct answer 27,070 Entry field with correct answer LINK TO TEXT LINK TO TEXT Incorrect answer. Your answer is incorrect. Try again. Assume the division is an investment center, and average operating assets were $1,124,400. The noncontrollable fixed costs are controllable at the investment center level. Compute ROI. (Round ROI to 1 decimal place, e.g. 1.5.) Return on investment Entry field with incorrect answer 2.4 % LINK TO TEXT LINK TO TEXT Question Attempts: Unlimited SAVE FOR LATER SUBMIT ANSWER

Answer 1

HARRINGTON COMPANY SPORTS EQUIPMENT DIVISION
	Actual	Budget	Variance
Sales	881500	896200	-14700	U
Variable Cost
Cost of goods sold	417170	443790	-26620	F
Selling & administration	61260	64300	3040	U
Total Variable Cost	478430	508090	-23580	F
Contribution Margin	403070	388110	14960	F
Controllable fixed cost
Cost of goods sold	105050	100000	5050	U
Selling & administration	73650	90810	-17160	F
Total Controllable Fixed cost	178700	190810	-12110	F
Controllable Margin	224370	197300	27070	F

b
Return on Investment:
	Actual	Budgeted
Controllable margin	224370	197300
Avg Operating Assets	1124400	1124400
ROI (contribution margin / avg operating assets)	20.0%	17.5%