Hall O Fame Products is a nationwide sporting goods manufacturer. The company operates with a widely based
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Division managers are evaluated using a performance measure that is calculated as the divisions contribution to corporate profits before taxes less a 20 percent investment charge on the divisions investment base. The investment base of each division is the sum of its year-end balances of accounts receivable, inventories, and net plant fixed assets (cost less accumulated depreciation). Corporate policies dictate that divisions minimize their investments in receivables and inventories. Investments in fixed plant assets are decisions jointly made by the division and corporate based on proposals made by division plant managers, available corporate funds, and general corporate policy.
James Davenport, division manager for the California sector, prepared the year 2 and preliminary year 3 budgets for his division late in year 1. Final approval of the year 3 budget took place in late year 2 after adjustments for trends and other information developed during year 2. Preliminary work on the year 4 budget also took place at that time. In early October of year 3, Davenport asked the division controller to prepare a report that presents performance for the first nine months of year 3. The report follows:
Required
a. Evaluate the performance of James Davenport for the nine months ending September 30,
Year 3. Support your evaluation with pertinent facts from the problem.
b. Identify the features of Hall O Fames division performance measurement reporting and evaluation system that need to be revised if it is to effectively reflect the responsibilities of the divisionalmanagers. Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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