Responsibility Repor1 - Manufacturing Company is an...

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Responsibility Report The scope of the investment center manager's responsibility significantly affects the content of the  performance report.  Since an investment center is an independent entity for operating purposes,  all  fixed costs are controllable by its manager . For example, the manager is responsible for  depreciation on investment center assets. Therefore, more fixed costs are identified as controllable in  the performance report for an investment center manager than in a performance report for a profit  center manager. The report also shows budgeted and actual ROI below controllable margin. To illustrate this responsibility report, we will now assume that the Marine Division of Mantle 
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Unformatted text preview: Manufacturing Company is an investment center. It has budgeted and actual average operating assets of $2,000,000. The manager can control $60,000 of fixed costs that were not controllable when the division was a profit center. Illustration 21-24 shows the division's responsibility report. 21-24 Responsibility report for investment center The report shows that the manager's performance based on ROI was below budget expectations by 1.8% (15.0% versus 13.2%). Top management would likely want an explanation of the reasons for this unfavorable result....
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Responsibility Repor1 - Manufacturing Company is an...

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