Chapter 24, Problem E24.22E

To determine

Concept Introduction

Responsibility Center: It is a subunit of a company, headed by a manager who holds responsibility towards its activities and results.

Flexible Budget: It is a type of budget that changes based on the volume of business activity.

Flexible Budget Variance: It is the difference between the flexible budget and the actual results of a subunit’s items.

1.

To Complete: The performance evaluation report for the given subunit.

To determine

2.

The type of responsibility center this subunit is.

To determine

3.

The items that should be investigated if part of management’s decision criteria is to investigate all variances exceeding $2,500 or 10%.

To determine

4.

Whether only unfavorable variances should be investigated.