QUESTION 2: MANAGING AND REPORTING PERFORMANCE (20 marks)

[Suggested time: 25 minutes]

League Apparel Ltd is a large garment manufacturer that operates through two manufacturing stores in Australia (Queensland and New South Wales (NSW)).

The following data relates to the Queenslands store.

Sales Revenue	$2 850 000
Variable Manufacturing costs	1 010 000
Variable selling & admin costs	320 000
Assistant store managers salary	56 000
Store managers salary	86 000
Local property taxes	5000

The Assistant store managers salary is set by the store manager and the store managers salary is set by top management. Other controllable fixed costs amount to $80 000. League Apparel Ltd uses a responsibility accounting system.

REQUIRED:

1. Calculate the following in relation to the Queenslands store. a. Store contribution margin. (3 marks) b. Total controllable fixed expenses. (2 marks)
2. c. Profit margin controllable by store manager. (2 marks)
3. d. Total fixed expenses attributable to Queenslands store, but controllable by others (2 marks)
4. e. Profit margin attributable to Queenslands store. (2 marks)

2. Which of the profit figures calculated above should be used to evaluate the performance of Queensland store manager? Explain your answer. (4marks)
3. Briefly outline and discuss two main purposes of performance measurement systems.