The Real Estate Products Division of McKenzie Co. is operated as a profit center. Sales for the division were budgeted for 2016 at $1,250,000. The only variable costs budgeted for the division were cost of goods sold ($610,000) and selling and administrative ($80,000). Fixed costs were budgeted at $130,000 for cost of goods sold, $120,000 for selling and administrative and $95,000 for noncontrollable fixed costs. Actual results for these items were:
Instructions
(a) Prepare a responsibility report for the Real Estate Products Division for 2016.
(b) Assume the division is an investment center, and average operating assets were $1,200,000. Compute ROI.

Question

The Real Estate Products Division of McKenzie Co. is operated as a profit center. Sales for the division were budgeted for 2016 at $1,250,000. The only variable costs budgeted for the division were cost of goods sold ($610,000) and selling and administrative ($80,000). Fixed costs were budgeted at $130,000 for cost of goods sold, $120,000 for selling and administrative and $95,000 for noncontrollable fixed costs. Actual results for these items were:  
Instructions
(a) Prepare a responsibility report for the Real Estate Products Division for 2016.
(b) Assume the division is an investment center, and average operating assets were $1,200,000. Compute ROI.

Quizplus · Accepted Answer

The Answer of The Real Estate Products Division of McKenzie Co. is operated as a profit center. Sales for the division were budgeted for 2016 at $1,250,000. The only variable costs budgeted for the division were cost of goods sold ($610,000) and selling and administrative ($80,000). Fixed costs were budgeted at $130,000 for cost of goods sold, $120,000 for selling and administrative and $95,000 for noncontrollable fixed costs. Actual results for these items were:  
Instructions
(a) Prepare a responsibility report for the Real Estate Products Division for 2016.
(b) Assume the division is an investment center, and average operating assets were $1,200,000. Compute ROI.