Print 3. One subunit of Racer Sports Company had the following financial results last month: (Click the icon to view the financial results.) Requirements Requirement 1. Complete the performance evaluation report for the subunit. (Enter a variance for each account, and select whether the variance is unfavourable (U) or favourable (F). Enter the results as positive numbers. Enter the variance percentages rounded to three decimal places, X.XXX%.) Flexible Budget Variance Flexible Racer SportsSubunit X Actual (U or F) Percentage Variance (U or F) % (8) % (9) % (10) Sales $ Budget 400,000 312,500 430,000 325,000 (1) (2) (3) $ 105,000 38,850 87,500 37,500 (4) % (11) Cost of goods sold Gross margin Operating expenses Operating income before service department charges Service department charges (allocated) 66,150 $ 50,000 (5) % (12) 37,500 25,000 (6) 1 % 28,650 $ 25,000 (13) (14) Operating income (7) % Requirement 2. Based on the data presented, what type of responsibility centre is this subunit? This performance report includes (15) therefore, this subunit must be (16) Requirement 3. Which items should be investigated if part of management's decision criteria is to investigate all variances equal to or exceeding $12,500 and exceeding 12% (both criteria must be met)? (Leave any unused cells blank.) (17) (18) (19) (20) Requirement 4. Should only unfavourable variances be investigated? Explain. Managers should investigate (21) Favourable variances (22) Management needs to evaluate (23) 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. Requirement 5. Is it possible that the variances are due to a higher-than-expected sales volume? Explain. Prin The flexible budget variance is due to (26) The flexible budget variances (24). due to sales volume differences between budget and actual. Differences in sales volume are captured by the (25) Requirement 6. Do you think management will place equal weight on each of the $12,500 variances? Explain. Management will (27) Additionally, they may not place much weight on (28) because (29) Requirement 7. Which balanced Scorecard perspective is being addressed through this performance report? In your opinion, is this performance report a leading or lagging indicator? Explain. The performance report addresses the (30) perspective of the balanced Scorecard. (31) performance measures tend to be (32) indicators. They typically (33) Requirement 8. List one key performance indicator for the other three balanced Scorecard perspectives. Indicate which perspective is being addressed by the indicators you list. Complete the following table to identify one key performance indicator for the three other balanced Scorecard perspectives. Key performance indicator (35) Balanced Scorecard perspective (34) (36) (38) (37) (39) Are they leading or lagging indicators? Explain. Each of these performance measures is a (40) indicator which tends to (41) The performance indicators listed above are often better at (42) 1: Financial results Flexible Budget Variance Percentage Variance* Flexible Racer Sports-Subunit X Actual Budget (U or F) (U or F) Sales $ 430,000 $ 400,000 325,000 312,500 Cost of goods sold Gross margin 105,000 $ 87,500 38,850 37,500 Operating expenses. Operating income before service department charges Service department charges 66,150 $ 50,000 37.500 25.000 Requirement 6. Do you think management will place equal weight on each of the $12,500 variances? Explain. Print Management will (27) Additionally, they may not place much weight on (28) because (29) Requirement 7. Which balanced Scorecard perspective is being addressed through this performance report? In your opinion, is this performance report a leading or lagging indicator? Explain. The performance report addresses the (30) perspective of the balanced Scorecard. (31) performance measures tend to be (32) indicators. They typically (33) Requirement 8. List one key performance indicator for the other three balanced Scorecard perspectives. Indicate which perspective is being addressed by the indicators you list. Complete the following table to identify one key performance indicator for the three other balanced Scorecard perspectives. Key performance indicator (35) Balanced Scorecard perspective (34) (36) (38) (37) (39) Are they leading or lagging indicators? Explain. Each of these performance measures is a (40) indicator which tends to (41) The performance indicators listed above are often better at (42) 1: Financial results Flexible Budget Flexible Variance Percentage Variance* (U or F) Racer Sports-Subunit X Actual Budget (U or F) Sales $ $ 400,000 430,000 325,000 312,500 Cost of goods sold Gross margin $ $ 87,500 105,000 38,850 37,500 Operating expenses. Operating income before service department charges Service department charges $ 66,150 $ 50,000 37,500 25,000 (allocated) $ Operating income .................. *Flexible budget variance / Flexible budget 28,650 $ 25,000
