29 Jun Question BU330 Accounting for Managers assignment
Question
BU330 Accounting for Managers assignment 4
Directions: Be sure to make an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar. Sources must be cited in APA format. Your response should be a minimum of one (1) single-spaced page to a maximum of two (2) pages in length; refer to the “Assignment Format” page for specific format requirements.
Return on Investment and Residual Income
Portia Carter is the president of a company that owns six multiplex movie theaters. Carter has delegated decision-making authority to the theater managers for all decisions except those relating to capital expenditures and film selection. The theater managers’ compensation depends on the profitability of their theaters. Max Burgman, the manager of the Park Theater, had the following master budget and actual results for the month.
Master
Actual
Budget
Results
Tickets sold
120,000
480,000
Revenue–tickets
$ 840,000
$ 880,000
Revenue–concessions
480,000
330,000
Total revenue
$1,320,000
$1,210,000
Controllable variable costs
Concessions
120,000
99,000
Direct labor
420,000
330,000
Variable overhead
540,000
550,000
Contribution margin
$ 240,000
$ 231,000
Controllable fixed costs
Rent
55,000
55,000
Other administrative expenses
45,000
50,000
Theater operating income
$ 140,000
$ 126,000
1. Assuming that the theaters are profit centers, prepare a performance report for the Park Theater using the chart below. Include a flexible budget. Determine the variances between actual results, the flexible budget, and the master budget. (25 points)
Actual
Flexible
Master
Results
Variance
Budget
Variance
Budget
Tickets sold
110,000
( )
120,000
Revenue–tickets
$ 880,000
( )
( )
$ 840,000
Revenue–concessions
330,000
( )
( )
480,000
Total revenue
$1,210,000
( )
$1,320,000
Controllable variable costs
Concessions
99,000
( )
( )
120,000
Direct labor
330,000
( )
( )
420,000
Variable overhead
550,000
( )
( )
540,000
Contribution margin
$ 231,000
( )
( )
$ 240,000
Controllable fixed costs
Rent
55,000
55,000
Other administrative expenses
50,000
( )
45,000
Theater operating income
$ 126,000
( )
( )
$ 140,000
2. Evaluate Burgman’s performance as a manager. (25 points)
3. Assume that the managers are assigned responsibility for capital expenditures and that the theaters are thus investment centers. Park Theater is expected to generate a desired ROI of at least 6 percent on average invested assets of $2,000,000.
a. Compute the theater’s return on investment and residual income using the chart below. (25 points)
Actual
Flexible
Master
ROI
÷
÷
÷
=
0.00%
=
0.00%
=
0.00%
Residual income
– (
0%
x
)
– (
0%
x
)
– (
0%
x
)
=
=
=
b. Using the ROI and residual income, evaluate Burgman’s performance as a manager. (25 points)
This is the end of Assignment 04.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.