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Strauss Company 2014

Price: $2.50

Strauss Company manufactures a variety of garden and lawn equipment. The
company operates through three divisions. Each division is an investment center. Operating
data for the Lawnmower Division for the year ended December 31, 2014, and relevant
budget data are as follows.

Average operating assets for the year for the Lawnmower Division were $5,000,000, which
was also the budgeted amount.

(a) Prepare a responsibility report (in thousands of dollars) for the Lawnmower Division.
(b) Compute the expected ROI in 2014 for the Lawnmower Division, assuming the following
independent changes.
(1) Variable cost of goods sold is decreased by 20%.
(2) Average operating assets are decreased by 24%.
(3) Sales are increased by $700,000, and this increase is expected to increase contribution
margin by $260,000

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