10#4

One subunit of

Zoom

Sports Company had the following financial results last month:

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(Click the icon to view the financial results.)Read the requirements

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.

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%".)

Zoom Sports CompanyTeam Sports Subunit
Monthly Performance Report
For the Month
Product	Actual		Budgeted	Variance
Sales	$486,900		$450,000
Less: Variable expenses	259,500		250,000
Contribution margin	$227,400		$200,000
Less: Direct fixed expenses	51,750		50,000
Segment margin	$175,650		$150,000
Less: Common fixed expenses	40,750		31,250
Operating income	$134,900		$118,750

Variance
Percentage
	%
	%
	%
	%
	%
	%
	%

Requirement 2. Based on the data presented, what type of responsibility center is this subunit?

This performance report includes

both revenue and cost data,

only cost data,

only revenue data,

therefore this subunit must be

a cost center.

an investment center.

a profit center.

a revenue center.

Requirement 3. Which items should be investigated if part of management's decision criteria is to investigate all variances equal to or exceeding

$9,500

and exceeding

16%

(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.

only favorable variances.

only unfavorable variances.

Favorable variances

may be due to bookkeeping or budgeting errors.

result in greater profits to the company.

indicate that the budget was prepared correctly.

Management needs to evaluate

large favorable as well as unfavorable variances

only favorable variances

only 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

are

are not

could be

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

$9,500

variances? Explain.Management will

not place as much weight on the variable expenses variance because it does not exceed 16%.

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 insignifigant

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 informations.

reporting on past financial data than projecting future performance.

Data table

Dialog content starts

	A	B	C	D	E
1	Zoom Sports Manufacturing CompanyTeam Sports Subunit
2	Monthly Performance Report
3	For the Month
4		Actual	Budgeted	Variance*	Variance Percentage*
5	Sales	$486,900	$450,000
6	Less: Variable expenses	259,500	250,000
7	Contribution margin	$227,400	$200,000
8	Less: Direct fixed expenses	51,750	50,000
9	Segment margin	$175,650	$150,000
10	Less: Common fixed expenses	40,750	31,250
11	Operating income	$134,900	$118,750

*Be sure to indicate whether each variance is favorable (F) or unfavorable (U).