Clarke Inc. operates the Patio Furniture Division as a profit center. Operating
ID: 2582699 • Letter: C
Question
Clarke Inc. operates the Patio Furniture Division as a profit center. Operating data for this division for the year ended December 31, 2017, are as shown below.
Budget
Difference
from Budget
Favorable
Favorable
Unfavorable
Unfavorable
Unfavorable
Unfavorable
In addition, Clarke incurs $ 183,200 of indirect fixed costs that were budgeted at $ 178,200 . Twenty percent ( 20 %) of these costs are allocated to the Patio Furniture Division.
Prepare a responsibility report for the Patio Furniture Division for the year. (List variable costs before fixed costs.)
CLARKE INC.
Patio Furniture Division
Responsibility Report
For the Year Ended December 31, 2017
Difference
Budget
Actual
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
Budget
Difference
from Budget
Favorable
Cost of goods sold Variable 1,309,900 43,200Favorable
Controllable fixed 195,100 2,200Unfavorable
Selling and administrative Variable 229,500 6,700Unfavorable
Controllable fixed 51,700 1,400Unfavorable
Noncontrollable fixed costs 74,900 3,400Unfavorable
Explanation / Answer
ans) Responsibility report for the Patio Furniture Division for the year
Particulars Budget Actual Difference
Sales (A) 2499900 2546600 46700 (F)
(2499900 + 46700)
Variable cost of goods sold 1309900 1266700 43200 (F)
(1309900 - 43200)
Variable S&A Costs 229500 236200 6700 (U)
(229500 + 6700)
Total variable costs (B) 1539400 1502900 36500 (F)
Contribution (C) = (A) - (B) 960500 1043700 83200 (F)
Fixed costs of goods sold 195100 197300 2200 (U)
(195100 + 2200)
Other controllable fixed costs 51700 53100 1400 (U)
(51700 + 1400)
Non controllable fixed costs 74900 78300 3400 (U)
(74900 + 3400)
Other specific fixed cost 35640 36640 1000(U) (178200 X 20%) (183200 X 20%)
Total fixed cost (D) 357340 365340 8000 (U)
Net income (C) - (D) 603160 678360 75200 (F)