Question

The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2020 at $896,000. The only variable costs budgeted for the division were cost of goods sold ($442,000) and selling and administrative ($65,000). Fixed costs were budgeted at $103,000 for cost of goods sold, $90,000 for selling and administrative, and $73,000 for noncontrollable fixed costs. Actual results for these items were:

Sales		$887,000
Cost of goods sold
Variable		409,000
Fixed		105,000
Selling and administrative
Variable		65,000
Fixed		69,000
Noncontrollable fixed		89,000

Prepare a responsibility report for the Sports Equipment Division for 2020. (List variable costs before fixed costs.)

HARRINGTON COMPANY Sports Equipment Division Responsibility Report For the Year Ended December 31, 2020
	Budget		Actual		Difference
					Favorable Unfavorable Neither Favorable nor Unfavorable
Noncontrollable Fixed CostsSelling and AdministrativeTotal Variable CostsControllable MarginCost of Goods SoldVariable CostsTotal Controllable Fixed CostsGross ProfitContribution MarginSalesControllable Fixed CostsTotal Noncontrollable Fixed Costs	$		$		$	Neither Favorable nor UnfavorableFavorableUnfavorable
Selling and AdministrativeTotal Controllable Fixed CostsNoncontrollable Fixed CostsContribution MarginTotal Noncontrollable Fixed CostsVariable CostsGross ProfitControllable Fixed CostsCost of Goods SoldSalesControllable MarginTotal Variable Costs
Gross ProfitSalesVariable CostsControllable MarginSelling and AdministrativeTotal Variable CostsTotal Noncontrollable Fixed CostsControllable Fixed CostsCost of Goods SoldContribution MarginNoncontrollable Fixed CostsTotal Controllable Fixed Costs						UnfavorableNeither Favorable nor UnfavorableFavorable
Total Noncontrollable Fixed CostsTotal Controllable Fixed CostsCost of Goods SoldGross ProfitTotal Variable CostsVariable CostsContribution MarginSelling and AdministrativeControllable MarginControllable Fixed CostsSalesNoncontrollable Fixed Costs						UnfavorableFavorableNeither Favorable nor Unfavorable
Controllable Fixed CostsNoncontrollable Fixed CostsContribution MarginControllable MarginVariable CostsSelling and AdministrativeGross ProfitTotal Controllable Fixed CostsSalesCost of Goods SoldTotal Noncontrollable Fixed CostsTotal Variable Costs						UnfavorableFavorableNeither Favorable nor Unfavorable
Cost of Goods SoldTotal Noncontrollable Fixed CostsSalesGross ProfitControllable Fixed CostsNoncontrollable Fixed CostsContribution MarginSelling and AdministrativeVariable CostsControllable MarginTotal Variable CostsTotal Controllable Fixed Costs						Neither Favorable nor UnfavorableUnfavorableFavorable
Controllable Fixed CostsCost of Goods SoldTotal Variable CostsGross ProfitSalesContribution MarginNoncontrollable Fixed CostsTotal Controllable Fixed CostsControllable MarginSelling and AdministrativeTotal Noncontrollable Fixed CostsVariable Costs
Variable CostsTotal Variable CostsTotal Controllable Fixed CostsTotal Noncontrollable Fixed CostsNoncontrollable Fixed CostsControllable MarginContribution MarginSelling and AdministrativeGross ProfitControllable Fixed CostsCost of Goods SoldSales						FavorableNeither Favorable nor UnfavorableUnfavorable
Cost of Goods SoldControllable Fixed CostsTotal Variable CostsContribution MarginSelling and AdministrativeGross ProfitSalesVariable CostsNoncontrollable Fixed CostsTotal Controllable Fixed CostsControllable MarginTotal Noncontrollable Fixed Costs						Neither Favorable nor UnfavorableUnfavorableFavorable
Controllable Fixed CostsSalesSelling and AdministrativeVariable CostsGross ProfitNoncontrollable Fixed CostsCost of Goods SoldTotal Noncontrollable Fixed CostsControllable MarginTotal Variable CostsContribution MarginTotal Controllable Fixed Costs						UnfavorableFavorableNeither Favorable nor Unfavorable
Total Variable CostsNoncontrollable Fixed CostsContribution MarginTotal Noncontrollable Fixed CostsCost of Goods SoldControllable MarginTotal Controllable Fixed CostsGross ProfitVariable CostsSelling and AdministrativeControllable Fixed CostsSales	$		$		$	Neither Favorable nor UnfavorableFavorableUnfavorable

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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 using the actual amounts. (Round ROI to 1 decimal place, e.g. 1.5.)

Return on investment

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