Question - Greene Enterprises prepares monthly departmental reports in an effort to control its operating costs. Each department has a manager to 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:

Budgeted    Actual

Sales $56,000   $63,000

Costs of goods sold 39,200     37,800

Gross margin   16,800     25,200

Direct operating expenses* 16,720           18,000

Contribution to indirect expense $80    $7,200

*of which $10,000 are costs not varying directly with sales volume at the expected level of sales.

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.

Question - Greene Enterprises prepares monthly departmental reports in an effort to control its operating costs. Each department has a manager to 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:

Budgeted Actual

Sales $56,000 $63,000

Costs of goods sold 39,200 37,800

Gross margin 16,800 25,200

Direct operating expenses* 16,720 18,000

Contribution to indirect expense $80 $7,200

*of which $10,000 are costs not varying directly with sales volume at the expected level of sales.

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.