Solution-Calculate the budgeted roi for the lawn mower

Calculate the budgeted roi for the lawn mower division

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Reference no: EM131715978

Question - Chudzik Manufacturing Company makes garden and lawn equipment. The company operates through three divisions. Each division is an investment centre. Operating data for the lawn mower division for the year ended December 31, 2016, and relevant budget data are as follows:

	Actual	Comparison with Budget
Sales	$2900000	$120000 unfavourable
Variable cost of goods sold	1400000	90000 unfavourable
Variable selling and administrative expenses	290000	60000 favourable
Controllable fixed cost of goods sold	270000	On target
Controllable fixed selling and administrative expenses	140000	On target

Average operating assets for the year for the lawn mower division were $5 milion, which was also the budgeted amount.

Requirements:

1. Calculate the budgeted ROI for the lawn mower division.

2. Calculate the actual ROI for the lawn mower division.

3. Calculate the expected ROI for the lawn mower division in the upcoming year assuming the following independent changes. Make these changes using the actual results as your starting point.

a. The variable cost of goods sold decreases by 15%.

b. The average operating assets decrease by 20%.

c. Sales increase by $500000 and this increase is expected to increase the contribution margin by $250000.

Reference no: EM131715978

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Calculate the budgeted roi for the lawn mower division

Reference no: EM131715978

Reference no: EM131715978

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