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P11.53B (LO 3) Henning Manufacturing Ltd. operates its patio furniture division as a profit centre....

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Question

Accounting

P11.53B (LO 3) Henning Manufacturing Ltd. operates its patio furniture division as a profit centre. Operating data for this division for the year ended December 31, 2022, are as follows:

Budget Difference from Budget
Sales $2,500,000 $60,000 F
Costs of goods sold
Variable costs 1,300,000 41,000 F
Controllable fixed costs 200,000 6,000 U
Selling and administrative expenses
Variable costs 220,000 7,000 U
Controllable fixed costs 50,000 2,000 U
Noncontrollable fixed costs 70,000 4,000 U

In addition, Henning Manufacturing incurred $180,000 of indirect fixed costs that were budgeted at $175,000. It allocates 20% of these costs to the patio furniture division. The division manager cannot control any of these costs.

Instructions

  1. Prepare a responsibility report for the patio furniture division for the year.

    a. Controllable margin: $86,000 F

  2. Comment on the managers performance in controlling revenues and costs.
  3. Identify any costs that have been excluded from the responsibility report and explain why they were excluded.

Prepare a responsibility report for an investment centre, and calculate ROI.

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