Trendables, a manufacturer of electronic jewelry had the following results from its Subunit W:
Requirements:
1. Complete the performance evaluation report for this subunit (round to two decimal places).
2. Based on the data presented and your knowledge of the company, what type of responsibility center is this subunit?
3. Which items should be investigated if management's decision criteria is to investigate all variances equal to or exceeding $10,000 and 10% (both criteria must be met)?
4. Is it possible that the variances are due to a higher-than-expected sales volume?
5. Which balanced scorecard perspective is being addressed by this performance report? Is it a lead or lag indicator?
Requirement 2:
The report includes both revenue and cost data; therefore, it must be a profit center.
Requirement 3:
The factors meeting both $10,000 and 10% are the variable expenses and 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.
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