One subunit of Soaring Sports Company had the following financial results last month: Read the requirement .
Question:
One subunit of Soaring Sports Company had the following financial results last month:
Read the requirement
.
A | B | C | D | E | |
1 | Soaring Sports Manufacturing Company—Team Sports Subunit | ||||
2 | Monthly Performance Report | ||||
3 | For the Month | ||||
4 | Actual | Budgeted | Variance* | Variance Percentage* | |
|---|---|---|---|---|---|
5 | Sales | $543,000 | $500,000 | ||
6 | Less: Variable expenses | 310,500 | 300,000 | ||
7 | Contribution margin | $232,500 | $200,000 | ||
8 | Less: Direct fixed expenses | 78,450 | 75,000 | ||
9 | Segment margin | $154,050 | $125,000 | ||
10 | Less: Common fixed expenses | 48,000 | 37,500 | ||
11 | Operating income | $106,050 | $87,500 | ||
*Be sure to indicate whether each variance is favorable (F) or unfavorable (U).
Requirement 1. Complete the performance evaluation report for this subunit (round to three decimal places). (Enter a variance for each account and select whether the variance is unfavorable (U) or favorable (F). Enter the results as positive numbers. Enter the variance percents as a percentage to three decimal places, "XX.XXX%".)
Soaring Sports Company—Team Sports Subunit | |||||||
Monthly Performance Report | |||||||
For the Month | |||||||
Product | Actual | Budgeted | Variance | ||||
Sales | $543,000 | $500,000 | 43,000 | F | |||
Less: Variable expenses | 310,500 | 300,000 | 10,500 | U | |||
Contribution margin | $232,500 | $200,000 | 32,500 | F | |||
Less: Direct fixed expenses | 78,450 | 75,000 | 3,450 | U | |||
Segment margin | $154,050 | $125,000 | 29,050 | F | |||
Less: Common fixed expenses | 48,000 | 37,500 | 10,500 | U | |||
Operating income | $106,050 | $87,500 | 18,550 |
| |||
Variance | ||||
Percentage | ||||
8.600 | % | F | ||
3.500 | % | U | ||
16.250 | % | F | ||
4.600 | % | U | ||
23.240 | % | F | ||
28.000 | % | U | ||
21.200 | % |
| ||
Requirement 2. Based on the data presented, what type of responsibility center is this subunit?
This performance report includes both revenue and cost data, therefore this subunit must be a profit center.
Requirement 3. Which items should be investigated if part of management's decision criteria is to investigate all variances equal to or exceeding
$10,500
and exceeding
10%
(both criteria must be met)? (If an input field is not used in the table, leave the input field empty; do not select a label.)
| ||
Requirement 4. Should only unfavorable variances be investigated? Explain.
Managers should investigate favorable as well as unfavorable variances.
Favorable variances
▼
Management needs to evaluate large favorable as well as unfavorable variances to determine the root cause of the variance.
Requirement 5. Is it possible that the variances are due to a higher-than-expected sales volume? Explain.
The flexible budget variances
▼
due to sales volume differences between budget and actual. Differences in sales volume are captured by the
▼
flexible budget.
revenue center performance report.
volume variance, not the flexible budget.
The flexible budget variance is due to
▼
something other than volume.
volume variances.
Requirement 6. Do you think management will place equal weight on each of the
$10,500
variances? Explain.Management will
▼
not place as much weight on the variable expenses variance because it does not exceed 10%.
place equal weight on both variances.
place more weight on the variable expenses variance.
Additionally, they may not place much weight on
▼
cost of sales variance
the common fixed expenses
the revenue variance
the volume variance
because
▼
this is a direct cost of the subunit
this is not a direct cost of the subunit.
the overall variance is insignificant
Requirement 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.
The performance report addresses the
▼
customer
financial
internal business
learning and growth
perspective of the balanced scorecard.
▼
Customer
Financial
Internal business
Learning and growth
performance measures tend to be
▼
lag
lead
indicators. They typically
▼
forcast future performance.
measure the results of past decisions.
Requirement 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.
Complete the following table to identify one key performance indicator for the three other balanced scorecard perspectives.
Balanced scorecard perspective | Key performance indicator | ||
Are they lead or lag indicators? Explain.
Each of these performance measures is a
▼
lag
lead
indicator which tend to
▼
forecast future performance.
measure the results of past decisions.
The performance indicators listed above are often better at
▼
projecting future performance than past financial data.
providing real time information.
reporting on past financial data than projecting future performance.
Expert Answer:
Monthly Performance Report is as prepared below Racer Sports Company Monthly Performance Report For ... View the full answer
