Jazz Division operates as a profit center. It reports the following data.
Budget amounts Actual results
Allocated fixed costs $ 40,000 $ 50,000
Direct fixed costs 80,000 60,000
Sales revenue 460,000 500,000
Variable costs 250,000 280,000
What is the Difference for the controllable margin indicated on the responsibility report for Jazz Division for the year? a. $40,000 Fb. $10,000 Fc. $30,000 Fd. $20,000 F

c. $30,000 F

Explanation:

As per the given question the solution of Difference for the controllable margin is provided below:-

To reach at Difference for the controllable margin first we will find the controllable margin of budgeted and controllable margin of actual which are as follows:-

Controllable margin of budgeted = Sales - Variable cost - Fixed cost

= $460,000 - $250,000 - $80,000

= $130,000

and

Controllable margin of Actual = Sales - Variable cost - Fixed cost

= $500,000 - $280,000 - $60,000

= $160,000

finally

Difference  for the controllable margin = Controllable margin of budgeted - Controllable margin of Actual

= $130,000 - $160,000

= -$30,000 Favorable

Here the actual is higher that budgeted so it will be favorable.

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