Chapter 10, Problem 10.54BP

Evaluate subunit performance (Learning Objectives 2 & 6)

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

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

10.5-30 Full Alternative Text

Requirements

1. 1. Complete the performance evaluation report for the 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 management’s decision criteria is to investigate all variances equal to or exceeding $10,000 and exceeding 14% (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 $10,000 variances? Explain.
7. 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. 8. List 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.