Evaluation of responsibility centers
Shown below are the current-year data for two investment centers of Chelsea Trading, Inc. The total assets utilized by each of these investment centers during the year amount to $1,500,000:

(a) Compute the following measures for each investment center:
$$\begin{array} { | c | c | c | c | }
\hline & & \text { Contribution } & \
\hline & \text { Contribution } & \text { Margin } & \text { Responsibility } \
\hline \text { Center } & \text { Margin } & \text { Ratio } & \text { Margin } \
\hline ( 1 ) & \$ & \% & \$ \
\hline ( 2 ) & \$ & \% & \$ \
\hline
\end{array}$$
(b) Assume that a $3,000 monthly expenditure for advertising could increase the monthly sales of either investment center by $20,000. Which center should the company advertise to receive the maximum benefit from its advertising expenditure? Center ________. Explain your Reasoning:

Question

Evaluation of responsibility centers
Shown below are the current-year data for two investment centers of Chelsea Trading, Inc. The total assets utilized by each of these investment centers during the year amount to $1,500,000:
 
(a) Compute the following measures for each investment center:
$$\begin{array} { | c | c | c | c | } 
\hline & & \text { Contribution } & \
\hline & \text { Contribution } & \text { Margin } & \text { Responsibility } \
\hline \text { Center } & \text { Margin } & \text { Ratio } & \text { Margin } \
\hline ( 1 ) & \$ & \% & \$ \
\hline ( 2 ) & \$ & \% & \$ \
\hline
\end{array}$$
(b) Assume that a $3,000 monthly expenditure for advertising could increase the monthly sales of either investment center by $20,000. Which center should the company advertise to receive the maximum benefit from its advertising expenditure? Center ________. Explain your Reasoning:

Quizplus · Accepted Answer

The Answer of Evaluation of responsibility centers
Shown below are the current-year data for two investment centers of Chelsea Trading, Inc. The total assets utilized by each of these investment centers during the year amount to $1,500,000:
 
(a) Compute the following measures for each investment center:
$$\begin{array} { | c | c | c | c | } 
\hline & & \text { Contribution } & \
\hline & \text { Contribution } & \text { Margin } & \text { Responsibility } \
\hline \text { Center } & \text { Margin } & \text { Ratio } & \text { Margin } \
\hline ( 1 ) & \$ & \% & \$ \
\hline ( 2 ) & \$ & \% & \$ \
\hline
\end{array}$$
(b) Assume that a $3,000 monthly expenditure for advertising could increase the monthly sales of either investment center by $20,000. Which center should the company advertise to receive the maximum benefit from its advertising expenditure? Center ________. Explain your Reasoning:

Evaluation of Responsibility Centers Shown Below Are the Current-Year Data

Evaluation of Responsibility Centers
Shown Below Are the Current-Year Data