One subunit of Event Sports Company had the following financial results last month: Data table: A B C D E 1 Event Sports Manufacturing Company—Team Sports Subunit 2 Monthly Performance Report 3 For the Month 4 Actual Budgeted Variance* Variance Percentage* 5 Sales $545,500 $500,000 6 Less: Variable expenses 387,000 375,000 7 Contribution margin $158,500 $125,000 8 Less: Direct fixed expenses 10,380 10,000 9 Segment margin $148,120 $115,000 10 Less: Common fixed expenses 52,000 40,000 11 Operating income $96,120 $75,000 *Be sure to indicate whether each variance is favorable (F) or unfavorable (U). Requirements: 1. Complete the performance evaluation report for this subunit (round to three decimal places). 2. Based on the data presented, what type of responsibility center is this subunit? 3. Which items should be investigated if part of the management's decision criteria is to investigate all variances equal to or exceeding $12,000 and exceeding 14% (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. Do you think management will place equal weight on each of the $12,000 variances? Explain. 7. Which balanced scorecard perspective is being addressed through this performance report? In your opinion, is this performance report a lead or lag indicator? Explain. 8. Give one key performance indicator for the other three balanced scorecard perspectives. Indicate which perspective is being addressed by the indicators you list. Are they lead or lag indicators? Explain.
One subunit of Event Sports Company had the following financial results last month: Data table: A B C D E 1 Event Sports Manufacturing Company—Team Sports Subunit 2 Monthly Performance Report 3 For the Month 4 Actual Budgeted Variance* Variance Percentage* 5 Sales $545,500 $500,000 6 Less: Variable expenses 387,000 375,000 7 Contribution margin $158,500 $125,000 8 Less: Direct fixed expenses 10,380 10,000 9 Segment margin $148,120 $115,000 10 Less: Common fixed expenses 52,000 40,000 11 Operating income $96,120 $75,000 *Be sure to indicate whether each variance is favorable (F) or unfavorable (U). Requirements: 1. Complete the performance evaluation report for this subunit (round to three decimal places). 2. Based on the data presented, what type of responsibility center is this subunit? 3. Which items should be investigated if part of the management's decision criteria is to investigate all variances equal to or exceeding $12,000 and exceeding 14% (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. Do you think management will place equal weight on each of the $12,000 variances? Explain. 7. Which balanced scorecard perspective is being addressed through this performance report? In your opinion, is this performance report a lead or lag indicator? Explain. 8. Give one key performance indicator for the other three balanced scorecard perspectives. Indicate which perspective is being addressed by the indicators you list. Are they lead or lag indicators? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
One subunit of Event Sports Company had the following financial results last month:
Data table:
|
|
A
|
B
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C
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D
|
E
|
|
1
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Event Sports Manufacturing Company—Team Sports Subunit
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||||
|
2
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Monthly Performance Report
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||||
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3
|
For the Month
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||||
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4
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Actual
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Budgeted
|
Variance*
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Variance Percentage*
|
|---|---|---|---|---|---|
|
5
|
Sales
|
$545,500
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$500,000
|
|
|
|
6
|
Less: Variable expenses
|
387,000
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375,000
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|
|
|
7
|
Contribution margin
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$158,500
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$125,000
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|
|
|
8
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Less: Direct fixed expenses
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10,380
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10,000
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|
|
|
9
|
Segment margin
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$148,120
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$115,000
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|
|
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10
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Less: Common fixed expenses
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52,000
|
40,000
|
|
|
|
11
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Operating income
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$96,120
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$75,000
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|
|
*Be sure to indicate whether each variance is favorable (F) or unfavorable (U).
Requirements:
|
1.
|
Complete the performance evaluation report for this subunit (round to three decimal places).
|
|
2.
|
Based on the data presented, what type of responsibility center is this subunit?
|
|
3.
|
Which items should be investigated if part of the management's decision criteria is to investigate all variances equal to or exceeding $12,000 and exceeding 14% (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.
|
Do you think management will place equal weight on each of the $12,000 variances? Explain. |
|
7.
|
Which balanced scorecard perspective is being addressed through this performance report? In your opinion, is this performance report a lead or lag indicator? Explain.
|
|
8.
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Give one key performance indicator for the other three balanced scorecard perspectives. Indicate which perspective is being addressed by the indicators you list. Are they lead or lag indicators? Explain.
|
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