Evaluating a companywide performance report Mr. Chandler, the production supervisor, bursts into your office, carrying the company?s 2014 performance report and thundering, ?There is villainy here, sir! And I shall get to the bottom of it. I will not stop searching until i have found the answer!

Why is Mr. Richards so down on my department? I thought we did a good job last year. But Richards claims my production people and i cost the company $31,500! I plead with you, sir; explain this performance report to me.? Trying to calm chandler, you take the report from him and ask to be left alone for 15 minutes. The report is as follows: (picture) required

Assume that the sales department is a profit center and that the production and administration departments are cost centers. Determine the responsibility of each for cost, revenue, and income variances, and prepare a report reconciling budgeted and actual net income. Your report should focus on the performance of each responsibility center

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Unit sales.. Sales. Less manufacturing costs Direct materials. Direct labor.. Manufacturing overhead DICKENS COMPANY, LIMITED Performance Report For Year 2014 Total... Gross profit.. Less selling and administrative expenses Selling (all fixed). Administrative (all fixed). Total... Net income. Performance Summary Budgeted net income... Sales department variances Sales revenue.. Selling expenses.. Administration department variances. Production department variances. Actual net income... Actual 7,500 $262,500 Budget 5,000 $225,000 47,500 32,500 55,500 48,000 40,000 (143,500) (112,000) 119,000 113,000 $ 37,500 F 17,800 U 32,000* 57,800 55,000 50,000 (112,800) (90,000) $ 6,200 $ 23,000 40,000 $19,700 F 5,000 U 31,500 U Variance $37,500 F 8,000 U 15,500 U 8,000 U (31,500) U 6,000 F 17,800 U 5,000 U (22,800) $16,800 U $23,000 16,800 U $ 6,200 Unit sales.. Sales. Less manufacturing costs Direct materials. Direct labor.. Manufacturing overhead DICKENS COMPANY, LIMITED Performance Report For Year 2014 Total... Gross profit.. Less selling and administrative expenses Selling (all fixed). Administrative (all fixed). Total... Net income. Performance Summary Budgeted net income... Sales department variances Sales revenue.. Selling expenses.. Administration department variances. Production department variances. Actual net income... Actual 7,500 $262,500 Budget 5,000 $225,000 47,500 32,500 55,500 48,000 40,000 (143,500) (112,000) 119,000 113,000 $ 37,500 F 17,800 U 32,000* 57,800 55,000 50,000 (112,800) (90,000) $ 6,200 $ 23,000 40,000 $19,700 F 5,000 U 31,500 U Variance $37,500 F 8,000 U 15,500 U 8,000 U (31,500) U 6,000 F 17,800 U 5,000 U (22,800) $16,800 U $23,000 16,800 U $ 6,200

Answer rating: 100% (QA)

Let me make a flexible budget reflecting what should be the actual figures of budget based on actual ... View the full answer