Flexible Budget % Variance (For U) Flexible Budget $ 455,000 255,000 200,000 Subunit X Actual Results Variance (F or U) Net Sales Revenue Variable Expenses Contribution Margin Traceable Fixed Expenses $ 474,000 261,000 213,000 38,000 29,000 Divisional Segment Margin $ 175,000 $ 171,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Integrating decentralization and performance evaluation systems

One subunit of Track Sports Company had the following financial results last month:

Requirements

  1. Complete the performance evaluation report for this subunit (round to two decimal places).
  2. Based on the data presented and your knowledge of the company, what type of responsibility center is this subunit?
  3. Which items should be investigated if part of management’s decision criteria is to investigate all variances equal to or exceeding $8,000 arm’ exceeding 10% (both criteria must be met)?
  4. Should only unfavorable variances be investigated? Explain.
  5. Is it possible that the variances are due to a higher-than-expected sales volume? Explain.
  6. Will management place equal weight on each of the variances exceeding $8,000? Explain.
  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.
  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.
Flexible Budget
% Variance
(For U)
Flexible Budget
$ 455,000
255,000
200,000
Subunit X
Actual Results
Variance (F or U)
Net Sales Revenue
Variable Expenses
Contribution Margin
Traceable Fixed Expenses
$ 474,000
261,000
213,000
38,000
29,000
Divisional Segment Margin
$ 175,000
$ 171,000
Transcribed Image Text:Flexible Budget % Variance (For U) Flexible Budget $ 455,000 255,000 200,000 Subunit X Actual Results Variance (F or U) Net Sales Revenue Variable Expenses Contribution Margin Traceable Fixed Expenses $ 474,000 261,000 213,000 38,000 29,000 Divisional Segment Margin $ 175,000 $ 171,000
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