ty repor 104A operates the Patio Furniture Division as a pro

ty repor 10-4A operates the Patio Furniture Division as a profit center. O this division for the year ended December 31, 2017, are as shown below, \" ating Difference Budget from Budget $2,500,000 Sales Cost of goods sold $50,000 F Variable Controllable fixed 1,300,000 200,000 41,000 F 3,000 U Selling and administrative Variable Controllable fixed 220,000 50,000 70,000 6,000 U 2,000 U 4,000 U Noncontrollable fixed costs

Solution

Answer:

1

CLARKE INC.

Patio Furniture Division

Responsibility Report

For the Year Ended December 31, 2017

Budgeted

Actual

Difference
Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

Sales

2,500,000

2550000

50,000 (F)

variable cost

Cost of goods sold

1300000

1259000

41,000 (F)

Selling and admin exp

220,000

226,000

6,000 (U)

Total variable Cost

1,520,000

1,485,000

35000 (F)

Contribution margin

980,000

1,065,000

85000 (F)

Controllable fixed cost

Cost of goods sold

200,000

203000

3,000 (U)

Selling and admin exp

50,000

52,000

2,000 (U)

Total Controllable fixed cost

250,000

255,000

5000 (U)

Controllable Margin

730,000

810,000

80,000 (F)

2

The manager of the particular division has a control up to some extent over the cost and revenue of that department

As from the calculation of the above table one can say that, there is increase in the sale but simultaneously increase in variable selling and admin expanses .This might be possible because patio division has made extra selling and admin expanses to increase a sales of that division. there is also increase in Controllable fixed cost of Cost of goods sold and Selling and admin exp . If such increase in divisional expanses are due to increase in sale then this will be accepted otherwise manager of the department must be suitable advised

3

Following cost are excluded from the responsibility report

(1)Non-controllable fixed cost

(2) The cost allocated from head office

above mention two cost should be excluded because the manager of the particular department has not control over such costs and he is not responsible for the cost.

CLARKE INC.
Patio Furniture Division
Responsibility Report
For the Year Ended December 31, 2017
	Budgeted	Actual	Difference Favorable (F) Unfavorable (U) Neither Favorable nor Unfavorable (N)
Sales	2,500,000	2550000	50,000 (F)
variable cost
Cost of goods sold	1300000	1259000	41,000 (F)
Selling and admin exp	220,000	226,000	6,000 (U)
Total variable Cost	1,520,000	1,485,000	35000 (F)
Contribution margin	980,000	1,065,000	85000 (F)
Controllable fixed cost
Cost of goods sold	200,000	203000	3,000 (U)
Selling and admin exp	50,000	52,000	2,000 (U)
Total Controllable fixed cost	250,000	255,000	5000 (U)
Controllable Margin	730,000	810,000	80,000 (F)