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P10-4B Guzman Inc. operates the Home Appliance

Price: $2.50

Guzman Inc. operates the Home Appliance Division as a profit center. Operating
data for this division for the year ended December 31, 2014, are shown on the next page.

In addition, Guzman incurs $150,000 of indirect fixed costs that were budgeted at $155,000.
Twenty percent (20%) of these costs are allocated to the Home Appliance Division. None of
these costs are controllable by the division manager.

(a) Prepare a responsibility report for the Home Appliance Division (a profit center) for
the year.
(b) Comment on the manager’s performance in controlling revenues and costs.
(c) Identify any costs excluded from the responsibility report and explain why they were


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