NEXT Lanier Company manufactures expensive watch cases sold

NEXT Lanier Company manufactures expensive watch cases sold as souvenirs. Three of it Retail Sales s sales departments are Retail Sales, Wholesale Sales, and Outlet Sales. The Department is a profit center. The Wholesale Sales Department is a cost center. Its managers merely take orders from wholesale catalog. The Outlet Sales Department is an investment center because each manager is given full responsibility for an outlet store location. The manager can hire and discharge employees, purchase, maintain, and sell equipment, and in general is fairly independent of company control. Mary Gammel is a manager in the Retail Sales Department. Stephen Flott manages the Wholesale Sales Department. Jose Gomez manages the Golden Gate Club outlet store in San Francisco. The following are the budget responsibility reports for each of the three departments. Retail Sales 750,000 Wholesale Sales Outlet Sales s 400,000 200,000 Cost of goods sold Advertising Sales salaries Printing 150,000 100,000 75,000 10,000 20,000 100,000 30,000 15,000 20,000 30,000 5,000 3,000 2,000 Fixed costs 50,000 30,000 10,000 Insurance Depreciation 75,000 1,000,000 100,000 1,200,000 40,000 Investment in assets 800,000 s 750,000 Cost of goods sold 26,500 192,000 100,000 75,000 10,000 30,000 Sales salaries 15,000 3,000 5,000 Next .

Solution

Question 1.

The items to be included in the responsibility report for each manager are as follows

a) Mary Gammel (Retail sales Dept): Cost of goods sold, Depreciation, Rent expenses and travelling

b) Stephen Flott (Wholesales Dept):  Cost of goods sold, Depreciation, Rent and travelling

c) Jose Gomez (Outlet sales Dept):  Cost of goods sold, Depreciation, Rent and travelling

Question 2.