Bonita Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2020, and relevant budget data are as follows. Actual Comparison with BudgetSales $1,399,000 $101,000 favorableVariable cost of goods sold 680,000 55,000 unfavorableVariable selling and administrative expenses 124,000 25,000 unfavorableControllable fixed cost of goods sold 171,000 On target Controllable fixed selling and administrative expenses 81,000 On target Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount.Compute the expected ROI in 2020 for the Home Division, assuming the following independent changes to actual data. (Round ROI to 2 decimal places, e.g. 1.57%.) The expected ROI(1) Variable cost of goods sold is decreased by 7%. %(2) Average operating assets are decreased by 12.5%. %(3) Sales are increased by $200,000, and this increase is expected to increase contribution margin by $85,000.

1. Variable cost of goods sold is decreased by 7%. Actual Increase/Decrease Total Sales…

Answered: Bonita Company manufactures a variety…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

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Bonita Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2020, and relevant budget data are as follows.

	Actual	Comparison with Budget
Sales	$1,399,000	$101,000	favorable
Variable cost of goods sold	680,000	55,000	unfavorable
Variable selling and administrative expenses	124,000	25,000	unfavorable
Controllable fixed cost of goods sold	171,000	On target
Controllable fixed selling and administrative expenses	81,000	On target

Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount.

Compute the expected ROI in 2020 for the Home Division, assuming the following independent changes to actual data. (Round ROI to 2 decimal places, e.g. 1.57%.)

		The expected ROI
(1)	Variable cost of goods sold is decreased by 7%.		%
(2)	Average operating assets are decreased by 12.5%.		%
(3)	Sales are increased by $200,000, and this increase is expected to increase contribution margin by $85,000.

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