For the year ending December 31, 2017, Cobb Company accumulates the following da
ID: 2455169 • Letter: F
Question
For the year ending December 31, 2017, Cobb Company accumulates the following data for the Plastics Division which it operates as an investment center: contribution margin—$700,000 budget, $710,000 actual; controllable fixed costs—$300,000 budget, $302,000 actual. Average operating assets for the year were $2,000,000.
Prepare a responsibility report for the Plastics Division beginning with contribution margin. (Round ROI to 1 decimal place, e.g. 1.5.)
COBB COMPANY
Plastics Division
Responsibility Report
For the Year Ended December 31, 2017
Difference
Budget
Actual
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
COBB COMPANY
Plastics Division
Responsibility Report
For the Year Ended December 31, 2017
Difference
Budget
Actual
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
Controllable Fixed CostsNet Income/(Loss)Return on InvestmentVariable CostsContribution MarginControllable MarginFixed CostsGross Profit
$
$
$
FavorableUnfavorableNeither Favorable nor Unfavorable
Variable CostsControllable Fixed CostsReturn on InvestmentContribution MarginControllable MarginFixed CostsGross ProfitNet Income/(Loss)
FavorableUnfavorableNeither Favorable nor Unfavorable
Controllable MarginControllable Fixed CostsFixed CostsGross ProfitNet Income/(Loss)Return on InvestmentVariable CostsContribution Margin
$ $ $FavorableUnfavorableNeither Favorable nor Unfavorable
Fixed CostsReturn on InvestmentNet Income/(Loss)Variable CostsContribution MarginControllable Fixed CostsControllable MarginGross Profit
% % %FavorableUnfavorableNeither Favorable nor Unfavorable
Explanation / Answer
COBB COMPANY
Plastics Division
Responsibility Report
For the Year Ended December 31, 2017
Budget Actual Difference
Controllable Fixed Costs 300000 302000 2000 Unfavourable
Net Income/(Loss) 400000 408000 8000 unfavourable
Contribution Margin 700000 710000 10000 unfavourable
Controllable Margin Fixed Costs 42.85% 42.53% 0.32% favourable
Return on Investment 20% 20.4% 0.4% unfavourable