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NeTakaya
3 years ago
8

The responsibility report for the Augusta Division shows budgeted contribution margin of $2,000,000 and budgeted controllable fi

xed costs of $1,000,000. Actual contribution margin for the division was $2,100,000 and actual controllable fixed costs were $900,000. The manager's overall performance
A :is equal to expectations.
B :is 20% below expectations.
C :cannot be determined based on the information provided.
D :is 20% above expectations.
Business
1 answer:
Mumz [18]3 years ago
5 0

Answer:

D) is 20% above expectations.

Explanation:

The Augusta Division was supposed to earn a net profit of $1,000,000 (= $2,000,000 - $1,000,000). Since the division's manager and his/her team were able to cut reduce fixed costs to $900,000 and increase contribution margin to $2,100,000 (either by increasing selling price or reducing variable costs), then the division earned a net profit of $1,200,000 (= $2,100,000 - $900,000). This net profit is 20% higher than expected, therefore the manager's (and his/her team's) overall performance was 20% above expectations.

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