Guzman Inc. operates the Home Appliance Division as a profit center. Operating data for this division for the year ended December 31, 2017, are shown on the next page.

		Budget		Difference from Budget
Sales		$2,400,000		$90,000 U
Cost of goods sold
Variable		1,200,000		58,000 U
Controllable fixed		200,000		8,000 F
Selling and administrative
Variable		240,000		8,000 F
Controllable fixed		60,000		3,000 U
Noncontrollable fixed costs		50,000		2,000 U

In addition, Guzman incurs $150,000 of indirect fixed costs that were budgeted at $155,000. Twenty percent (20%) of these costs are allocated to the Home Appliance Division. None of these costs are controllable by the division manager.

Instructions

(a) Prepare a responsibility report for the Home Appliance Division (a profit center) 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.

(a) Responsibility Report

For the Year Ended December 31, 2017

	Budget	Actual	Favorable F Unfavorable U
Sales	2,400,000	2,310,000	90,000 U
Variable Costs:
Total
Contribution Margin
Controllable Fixed Costs:
Total
Controllable Margin

(b) Two costs are excluded from the report are:

(1) _____________________________________

(2) _____________________________________

The reason that they are excluded is: ____________________________________________