Chapter 10, Problem 10.48AP

Evaluate subunit performance (Learning Objectives 2 & 6)

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

*Be sure to indicate whether each variance is favorable (F) or unfavorable (U).

Requirements

1. 1. Complete the performance evaluation report for this subunit (round to three decimal places).
2. 2. Based on the data presented, what type of responsibility center is this subunit?
3. 3. Which items should be investigated if part of the management’s decision criteria is to investigate all variances equal to or exceeding $13,500 and exceeding 16% (both criteria must be met)?
4. 4. Should only unfavorable variances be investigated? Explain.
5. 5. Is it possible that the variances are due to a higher-than-expected sales volume? Explain.
6. 6. Do you think management will place equal weight on each of the $13,500 variances? Explain.
7. 7. Which balanced scorard perspective is being addressed through this performance report? In your opinion, is this performance report a lead or lag indicator? Explain.
8. 8. Give one key performance indicator for the other three balanced scorecard perspectives. Indicate which perspective is being addressed by the indicator you list. Are they lead or lag indicators? Explain.