Responsibility income statement Classico's Pizza, a chain of pizza parlors, views each branch location as an investment center. The local branch reported the following results for the current year:

Compute the following measures for this investment center:

(a) Contribution margin: $_______________
(b) Contribution margin ratio: _______________%
(c) Responsibility margin: $_______________
(d) Increase in annual responsibility margin that would be expected to result from a 10% increase in sales volume: $_______________

What will be an ideal response?

a) 630,000
(b) 17.5
(c) 360,000
(d) 63,000

Feedback: (a) $3,600,000 - $2,970,000 = $630,000
(b) $630,000/$3,600,000 = 17.5%
(c) $3,600,000 - $2,970,000 - $270,000 = $360,000
(d) ($3,600,000 × 10%) × 17.5% (part b) = $63,000