One subunit of Winter Sports Company had the following financial results last month:
Winter Sports Manufacturing Company-Team Sports Subunit Monthly Performance Report For the Month Variance Percentage Variance* Actual Budgeted Sales 543,000 500,000 310,500 300,000 Less: Variable expenses Contribution margin 232,500 200,000 78,450 75,000 Less: Direct fixed expenses Segment margin 154,050 125,000 48,000 37,500 Less: Common fixed expenses 106,050 87,500 Operating income Be sure to indicate whether each variance is favorable (F) or unfavorable (U). favorable 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) (F). Enter the results as positive numbers. Enter the variance percents as a percentage to three decimal places, "XX.XXX %". ) Winter Sports Company-Team Sports Subunit Monthly Performmance Report For the Month Variance Percentage Product Actual Budgeted Variance S Sales S 543,000 500,000 310,500 300.000 Less: Variable expenses Contribution margin S S 232,500 200,000 78,450 75,000 Less: Direct fixed expenses 154,050 125,000 Segment margin 48.000 37.500 Less: Common fixed expenses 87 500 106,050 Operating income Requirement 2. Based on the data presented, what type of responsibility center this subunit? This performance report includes therefore this subunit must be Requirement 3. Which items should be investigated if part of management's decision criteria is to investigate all variances equal to box is not used in the table, leave the box empty; do not select a label.) exceeding $10,500 and exceeding 14% (both criteria must be met)? (If a Requirement 4. Should only unfavorable variances be investigated? Explain. Management needs to evaluate Managers should investigate Favorable 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 due to sales volume differences between budget and actual. Differences in sales volume are captured by the The flexible budget variance is due to Requirement 6. Do you think management will place equal weight on each of the $10,500 variances? Explain. Management will Additionally, they may not place much weight on because 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. performance measures tend indicators. They typically perspective The performance report addresses the f the balanced scorecard. be 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, indicator which tend to The performance indicators listed above are often better at Each of these performance measures is a
