Requirement 1. Complete the performance evaluation report for the subunit. (Ente
ID: 2572442 • Letter: R
Question
Requirement 1. Complete the performance evaluation report for the subunit. (Enter a variance for each account and select whether the variance is favorable or unfavorable. Enter the variance percent as a percentage rounded to two decimalplaces, X.XX%.)
Actual
Flexible
Flexible Budget
Subunit X
Results
Budget
Variance (F or U)
Sales
$475,000
$450,000
Variable Expenses
266,000
250,000
Contribution Margin
$209,000
$200,000
Traceable Fixed Expenses
35,000
27,000
Divisional Segment Margin
$174,000
$173,000
% Variance
(F or U)
%
%
%
%
%
Requirement 2. Based on the data presented and your knowledge of the company, what type of responsibility center is this subunit?
This performance report includes
; therefore, this subunit must be
Requirement 3. Which items should be investigated if part of management's decision criteria is to investigate all variances equal to or exceeding
$ 4 comma 000$4,000
and exceeding 10% (both criteria must be met)?
Management should investigate the following: (Leave unused cells blank.)
Requirement 4. Should only unfavorable variances be investigated? Explain.
Managers should investigate
favorable as well as unfavorable variances
only favorable variances
only unfavorable variances
. Favorable expense variances
indicate that the budget was prepared correctly
may indicate costs are being cut that might impact future operations
result in greater profits to the company
.
Requirement 5. Is it possible that the variances are due to a higher-than-expected sales volume? Explain.
The flexible budget variances
are
are not
due to sales volume differences between budget and actual. Differences in sales volume are captured by the
flexible budget
revenue center performance report
sales volume variance, not the flexible budget variance
. The flexible budget variance is due to
actual prices and costs varying from standards.
sales volume variances
.
Requirement 6. Will management place equal weight on each of the variances exceeding
$ 4 comma 000$4,000?
Explain.
Management will
not place as much weight on each of the variances which exceed $4,000
place equal weight on all variances
place more weight on the variable expenses variance
because
all variances have a signficant impact on the company's bottom line.
they will consider the percentage change also.
variable expenses are more important than any of the other items.
Requirement 7. Which balanced scorecard perspective is being addressed through this performance report? In your opinion, is this performance report a lead or a lag indicator? Explain.
The performance report addresses the
customer
financial
internal business
learning and growth
perspective of the balanced scorecard.
Customer
Financial
Internal business
Learning and growth
performance measures tend to be
lag
lead
indicators. They typically
forcast future performance.
measure the results of past decisions.
Requirement 8. List one key performance indicator for the three other balanced scorecard perspectives. Make sure to indicate which perspective is being addressed by the indicators you list.
Complete the following table to identify one key performance indicator for the three other balanced scorecard perspectives.
Balanced scorecard
Key performance
perspective
indicator
Actual
Flexible
Flexible Budget
Subunit X
Results
Budget
Variance (F or U)
Sales
$475,000
$450,000
Variable Expenses
266,000
250,000
Contribution Margin
$209,000
$200,000
Traceable Fixed Expenses
35,000
27,000
Divisional Segment Margin
$174,000
$173,000
Explanation / Answer
Actual A Flexible B Subunit X Results Budget Variance (F or U) (A-B)/B*100 Sales $475,000 $450,000 5.56 F Variable Expenses 266,000 250,000 6.40 U Contribution Margin $209,000 $200,000 4.50 F Traceable Fixed Expenses 35,000 27,000 29.63 U Divisional Segment Margin $174,000 $173,000 0.58 F ans 2 The performance report includes both revenue and cost data therefor this submit - profit centre ans 3 Traceable fixed expenses ans 4 favorable as well as unfavorable variances ans 5 are not sales volume variance . The flexible budget variance is due to actual prices and costs varying from standards. . ams 6 Management will not place as much weight on each of the variances which exceed $4,000 because they will consider the percentage change also. ans 7 The performance report addresses the financial Financial lag indicators. They typically measure the results of past decisions.
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