Question
10#4 One subunit of Zoom Sports Company had the following financial results last month: LOADING... (Click the icon to view the financial results.)Read the requirements
10#4
One subunit of
Zoom
Sports Company had the following financial results last month:
LOADING...
(Click the icon to view the financial results.)Read the requirements
LOADING...
.
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).
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