Evaluation of Responsibility Centers
Shown Below Are the Current-Year Data

question 18

Essay

Evaluation of responsibility centers
Shown below are the current-year data for two investment centers of Chelsea Trading, Inc. The total assets utilized by each of these investment centers during the year amount to $1,500,000:

(a) Compute the following measures for each investment center:
$$\begin{array} { | c | c | c | c | } \hline & & \text { Contribution } & \\\hline & \text { Contribution } & \text { Margin } & \text { Responsibility } \\\hline \text { Center } & \text { Margin } & \text { Ratio } & \text { Margin } \\\hline ( 1 ) & \$ & \% & \$ \\\hline ( 2 ) & \$ & \% & \$ \\\hline\end{array}$$
(b) Assume that a $3,000 monthly expenditure for advertising could increase the monthly sales of either investment center by $20,000. Which center should the company advertise to receive the maximum benefit from its advertising expenditure? Center ________. Explain your Reasoning:

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Definitions:

HEAT Technique

A method often used for treating injuries, standing for Heat, Elevate, and Treat, aiming to reduce pain and promote healing.

Apologize

The act of expressing regret or sorrow for actions that may have caused harm or inconvenience to others.

THINK Technique

A mindfulness strategy often used to encourage thoughtful responses rather than reactive ones, asking if a statement is True, Helpful, Inspiring, Necessary, and Kind before speaking or acting.

Necessary

A requirement or need for a particular purpose or reason.