For the year ending December 31, 2017, Cobb Company accumulates the following da
ID: 2576317 • 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)Gross ProfitContribution MarginVariable CostsReturn on InvestmentFixed CostsControllable Margin
$ $ $FavorableUnfavorableNeither Favorable nor Unfavorable
Contribution MarginFixed CostsControllable Fixed CostsControllable MarginGross ProfitNet Income/(Loss)Return on InvestmentVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Variable CostsReturn on InvestmentControllable Fixed CostsContribution MarginFixed CostsControllable MarginGross ProfitNet Income/(Loss)
$ $ $FavorableUnfavorableNeither Favorable nor Unfavorable
Variable CostsContribution MarginControllable Fixed CostsGross ProfitNet Income/(Loss)Controllable MarginFixed CostsReturn on Investment
% % %FavorableUnfavorableNeither Favorable nor Unfavorable
Explanation / Answer
ans) Budget Actual Difference Favourable / unfavourable
Contribution 700,000 710,000 10,000 Favourable
Less:
Controllable fixed costs (300,000) (302,000) 2000 Unfavourable
OPerting profit 400,000 408000 8000 Favouable
Return on investment 20% 20.4% 0.4% Favourable
( 400,000 / 2,000,000) (408000 / 2000000)