Transcribed image text: Part 1 - Performance evaluation (30 marks) 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. Total 10,000,000 Sales Direct Material (Note 1) Direct Labour (Note 1) Factory Overhead Cost of Goods Soid 2,000,000 2,500,000 1,500,000 Budget Plant A 3,000,000 1,000,000 750,000 250,000 2,000,000 Depr1 750,000 Deprz 1.250,000 Plant B 1,500,000 500,000 500,000 200,000 1.200.000 500 000 700.000 Plant 5,500,000 500,000 1,250,000 1,050,000 2,800,000 1,200,000 1,600,000 6,000,000 4,000,000 Abcated 100,000 750,000 750,000 Alocated Gross Profit Advertising Selling Corporate Period Expenses Operating Profit Taxes Net Income 1,000,000 300,000 25,000 125,000 250,000 200,000 250,000 50,000 525,000 275,000 475,000 25,000 2,700,000 50,000 300.000 450,000 800.000 1,900,000 Albcated 1,600,000 2,100,000 600,000 1,800,000 3,000,000 1,500,000 10,000,000 5,500,000 Invested Assets Note 1 Volume 200,000 units 125,000 hours Price $ 10.00 S 20.00 Total 2,000,000 2,500,000 Direct Material Direct Labour 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. 2 Actual Total 11,000,000 Sales Direct Material (Note 2) Direct Labour (Note 2) Factory Overhead Cost of Goods Sold 2,100,000 3,000,000 1,700,000 Plant A 3,200,000 1,100,000 800,000 300,000 2,200,000 700,000 1,500,000 Plant B 1,400,000 400,000 500,000 250,000 1,150,000 600,000 550,000 Plant C 6,400,000 600,000 1,700,000 1,150,000 3,450,000 1,300,000 2150000 6,800,000 Dept 1 Dept 2 4,200,000 150,000 800,000 725,000 Gross Profit Advertising Selling Corporate Period Expenses Operating Profit Taxes Net Income 1,000,000 25,000 300,000 250,000 575,000 425,000 250,000 25,000 125,000 25,000 175,000 75,000 2,950,000 100,000 375,000 450,000 925,000 2,025,000 1,675,000 2,525,000 635,000 1,890,000 3,000,000 6,500,000 1.500,000 11,000,000 Invested Assets Note 2 Direct Material Direct Labour Price $ 12.00 5 15.00 Volume 175,000 units 200,000 hours Total 2,100,000 3,000,000 1. Prepare a budget to actual analysis for the Total company and its three Plant profit centers comparing operating profits. 2. Prepare a budget to actual analysis for the nine cost centers of the company. 3. 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. 4. Prepare a residual income analysis for the three Plants assuming that the required return for the Plants is 15%. 5. Prepare a variance analysis for direct material and direct labour indicating price and volume variances. 6. 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? Transcribed image text: Part 1 - Performance evaluation (30 marks) 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. Total 10,000,000 Sales Direct Material (Note 1) Direct Labour (Note 1) Factory Overhead Cost of Goods Soid 2,000,000 2,500,000 1,500,000 Budget Plant A 3,000,000 1,000,000 750,000 250,000 2,000,000 Depr1 750,000 Deprz 1.250,000 Plant B 1,500,000 500,000 500,000 200,000 1.200.000 500 000 700.000 Plant 5,500,000 500,000 1,250,000 1,050,000 2,800,000 1,200,000 1,600,000 6,000,000 4,000,000 Abcated 100,000 750,000 750,000 Alocated Gross Profit Advertising Selling Corporate Period Expenses Operating Profit Taxes Net Income 1,000,000 300,000 25,000 125,000 250,000 200,000 250,000 50,000 525,000 275,000 475,000 25,000 2,700,000 50,000 300.000 450,000 800.000 1,900,000 Albcated 1,600,000 2,100,000 600,000 1,800,000 3,000,000 1,500,000 10,000,000 5,500,000 Invested Assets Note 1 Volume 200,000 units 125,000 hours Price $ 10.00 S 20.00 Total 2,000,000 2,500,000 Direct Material Direct Labour 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. 2 Actual Total 11,000,000 Sales Direct Material (Note 2) Direct Labour (Note 2) Factory Overhead Cost of Goods Sold 2,100,000 3,000,000 1,700,000 Plant A 3,200,000 1,100,000 800,000 300,000 2,200,000 700,000 1,500,000 Plant B 1,400,000 400,000 500,000 250,000 1,150,000 600,000 550,000 Plant C 6,400,000 600,000 1,700,000 1,150,000 3,450,000 1,300,000 2150000 6,800,000 Dept 1 Dept 2 4,200,000 150,000 800,000 725,000 Gross Profit Advertising Selling Corporate Period Expenses Operating Profit Taxes Net Income 1,000,000 25,000 300,000 250,000 575,000 425,000 250,000 25,000 125,000 25,000 175,000 75,000 2,950,000 100,000 375,000 450,000 925,000 2,025,000 1,675,000 2,525,000 635,000 1,890,000 3,000,000 6,500,000 1.500,000 11,000,000 Invested Assets Note 2 Direct Material Direct Labour Price $ 12.00 5 15.00 Volume 175,000 units 200,000 hours Total 2,100,000 3,000,000 1. Prepare a budget to actual analysis for the Total company and its three Plant profit centers comparing operating profits. 2. Prepare a budget to actual analysis for the nine cost centers of the company. 3. 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. 4. Prepare a residual income analysis for the three Plants assuming that the required return for the Plants is 15%. 5. Prepare a variance analysis for direct material and direct labour indicating price and volume variances. 6. 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