ACTG 131 E.C CH. 1O
b. The Legal Department of the Progressive Group of Insurance Companies prepares its budget and subsequent performance report on the basis of its expected expenses for the year.
cost center
d. Time Warner Inc.'s investor relations website provides operating and financial information to investors and other interested parties.
cost center
Identify each responsibility center as a cost center, a revenue center, a profit center, or an investment center. CHECK BELOW:
options: a. investment center b. cost center c. profit center d. revenue center
c. The online division of David's Bridal, Inc., reports both revenues and expenses.
profit center
e. The manager of the Speedway convenience store located on Verona Road in Madison, Wisconsin, is evaluated based on the store's revenues and expenses.
profit center
f. A charter airline records revenues and expenses for each airplane each month. Each airplane's performance report shows its income, including its revenue and expenses.
profit center
h. The Bakery Department of a Kroger grocery store reports income for the current year.
profit center
g. The manager of the southeastern sales territory is evaluated based on a comparison of current period sales against budgeted sales.
revenue center
Dellwood Manufacturing makes a variety of products, including lawn mowers. Dellwood's Lawn Mower Division can use a component, K32, manufactured by Dellwood's Electrical Division. The market price for K32 is $25 per unit. The variable cost per unit for K32 in the Electrical Division is $11, while the absorption cost per unit is $21. The divisions at Dellwood use a negotiated price strategy to set transfer prices between divisions. The Electrical Division has excess capacity. What is the lowest acceptable transfer price to the Electrical Division? What is the highest acceptable transfer price that the Lawn Mower Division would pay? Explain your answer.
$11, the variable cost, is the lowest acceptable transfer price to the Electrical Division. $25, the market price, is the highest acceptable transfer price that the Lawn Mower Division would pay.
The following is a partially completed performance report for Water SurfWater Surf. REQUIREMENTS: 1. How many pools did Water SurfWater Surf originally think it would install in April?
1. The master budget indicates that Water Surf planned to sell 4 pools in April.
2. How many pools did Water Surf actually install in April?
2. The actual results indicate that Water Surf installed 5 pools in April.
3. How many pools is the flexible budget based on? Why?
3. The flexible budget for performance reports is always based on the actual output for the month. This is done so that managers can compare apples-to-apples, meaning they can compare actual revenues and expenses to revenues and expenses they would expect to achieve given the same volume. Therefore, Water Surf's flexible budget is based on 5 pools.
4. What was the budgeted sales price per pool?
4. The budgeted sales price is $25,000 per pool. to get this number: (sales revenue) flexible budget - master budget (125000 - 100000)
5. What was the budgeted variable cost per pool?
5. The budgeted variable cost is $12,200 per pool. to get this number: (variable expenses) flexible budget - master budget (61000 - 48800)
6. Define the flexible budget variance. What causes it?
As the name suggests, the flexible budget variance is the difference between the flexible budget and the actual results. Since the actual results and the flexible budget are based on the same volume of output, this variance highlights unexpected revenues and expenses that are caused by factors other than volume.
a. Baskin-Robbins is a subsidiary of Dunkin' Brands; Dunkin' Brands owns and operates nearly 2,500 ice cream specialty stores in the United States.
Investment Center
The following is a partial performance report for a revenue center for the Southwest Division of Flower City Restaurants. Fill in the missing amounts. Indicate whether each variance is favorable (F) or unfavorable (U).
So basically, to find the variance: Variance* = Actual Sales - Budgeted Sales * if it's negative, it's U. if it's positive, it's F to find variance %: Variance %* = (Variance / Budgeted Sales) x 100 * the F or U is going to be the same from the Variance. just copy it.
7. Define the volume variance. What causes it?
The volume variance is the difference between the master budget and the flexible budget. The only difference between these two budgets is the volume of units on which they are based. Therefore, the volume variance is caused by differences between actual and expected volume.
Polymer Chemical Corporation has three divisions. Following is division information from the most recent year. For each of the three divisions, calculate sales margin, capital turnover, and return on investment (ROI).
a. First enter the formula for sales margin, then calculate for each division. operating income / sales = Sales Margin* * times the number by 100 to get the % b. Next enter the formula for capital turnover, then calculate for each division. Sales / total assets = Capital Turnover c. Next enter the formula for ROI, then calculate for each division. Operating income / total assets = ROI* * times the decimal answer by 100 to get the %
