Problem - Greene Enterprises prepares monthly departmental reports in an effort to control its operating costs. Each department has a manager whom the report is addressed and who is held responsible for the operating results in his or her department. The report made to Department D for October follows:
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Budgeted
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Actual
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|
Sales
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$56,000
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$63,000
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|
Cost of Goods Sold
|
39,200
|
37,800
|
|
Gross Margin
|
16,800
|
25,200
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|
Direct Operating expenses*
|
16,720
|
18,000
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|
Contribution to indirect expense
|
80
|
7,200
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*Of which $10K are costs not varying directly with sales volume at the expected level of sales?
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Required: Prepare a report that will be of more value in analyzing and appraising the performance of the manager of Department D for October. Comment on the operating results.