Exam 24: Responsibility Accounting and Performance Evaluation

Correct Answer:

Verified

Requirement 1:
$\begin{array}{|l|r|r|r|r|}\hline \textbf { Subunit W } & \begin{array}{l}\textbf { Actual } \\\textbf { Results } \\\end{array} & \begin{array}{l}\textbf { Flexible } \\\textbf { Budget } \\\end{array} & \begin{array}{c}\textbf { Flexible } \\\textbf { Budget } \\\textbf { Variance } \\\textbf { (F or U) } \\\end{array} & \begin{array}{c} \textbf {\% of Variance } \\\textbf { (F or U) } \\\end{array} \\\hline \text { Net Sales Revenue } & \$ 587,000 & \$ 562,000 & \$ 25,000 \mathrm{~F} & 4.45 \% \mathrm{F} \\\hline \text { Variable Expenses } & \underline{372,000}_{} & \underline{362,000} & 10,000 \mathrm{U} & 2.76 \% \mathrm{U} \\\hline \text { Contribution Margin } & 215,000 & 200,000 & 15,000 \mathrm{~F} & 7.50 \% \mathrm{H} \\\hline \text { Traceable Fixed Expenses } & \underline{50,000}_{} & \underline{37,000} & 13,000 \mathrm{U} & 35.14 \% \mathrm{U} \\\hline \text { Divisional Segment Margin } & \underline{\$ 165,000} & \underline{\$ 163,000} & \$ 2,000 \mathrm{F} & 1.23 \% \mathrm{F} \\\hline\end{array}$ Requirement 2:
The report includes both revenue and cost data; therefore,it must be a profit center.
Requirement 3:
The only factor meeting both $9,000 and 10% are the traceable fixed expenses.
Requirement 4:
The flexible budget variances are not due to sales volume differences between budget and actual.Variances due to differences in sales volume are captured by the sales volume variance,not the flexible budget variance.The flexible budget variance is due to actual prices and costs varying from standards.
Requirement 5:
The performance report addresses the financial perspective of the balanced scorecard.Financial performance measures tend to be lag indicators.