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BU330 Accounting for Managers assignment 4




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.


Paper#44521 | Written in 18-Jul-2015

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