Use the following tables to answer the questions below on performance evaluation. The first table is the
Question:
Use the following tables to answer the questions below on performance evaluation. The first table is the budget, and the second table is the actual results for the year. Round amounts to dollars and percentages to one decimal.
Note that there are several cost centers, profit centers and investment centers in the budget and actuals results. The “Total” column is the entire company managed by a chief executive officer while Plants, Departments (e.g., Dept 1 and 2) and specific period costs are managed by other managers given their assigned responsibilities. Within the Plants, there are two departments per Plant (i.e., Plant A has departments 1 and 2 and Plant B also has departments 1 and 2, separately managed). Period costs are allocated based on an activity based accounting driver and are not separate cost centers within the Plants. The company manages with four investments centers, four profit centers and nine costs centers.
Questions
- Prepare a budget to actual analysis for the Total company and its three Plant profit centers comparing operating profits.
- Prepare a budget to actual analysis for the nine cost centers of the company.
- Prepare a return on investment (ROI) calculation for the Total company and the three Plants using the expanded formula which shows the components of ROI.
- Prepare a residual income analysis for the three Plants assuming that the required return for the Plants is 15%.
- Prepare a variance analysis for direct material and direct labour indicating price and volume variances.
- Name which cost centers, profit centers and investment centers did not perform well for the year. How would you assess the direct labour results? What went wrong with direct labour?
Calculus Early Transcendentals
ISBN: 978-0321947345
2nd edition
Authors: William L. Briggs, Lyle Cochran, Bernard Gillett