Managerial Accounting: P24-22B One subunit of Freeway Sports Company had the following

Managerial Accounting
"P24-22B Explaining why and how companies decentralize and why they
use performance evaluation systems"
One subunit of Freeway Sports Company had the following financial results last month:
Subunit X Flexible Budget for Actual Number of Units Sold Actual Results at Actual Prices Flexible Budget Variance (F or U) % Variance (F or U)
Sales 450,000 478,000
Variable Expenses 253,000 263,000
Contribution Margin 197,000 215,000
Fixed Expenses 50,000 55,000
Operating income before traceable service department charges 147,000 160,000
Traceable Fixed Expenses 30,000 40,000
Divisional Segment Margin $117,000 $120,000

1. Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage rounded 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 part of management’s decision criteria is to investigate all variances equal to or exceeding $10,000 and exceeding 10% (both criteria must be met)?
4. Should only unfavorable variances be investigated? Explain.
5. Is it possible that the variances are due to a higher-than-expected sales volume? Explain.
6. Will management place equal weight on each of the $10,000 variances? Explain.
7. Which balanced scorecard perspective is being addressed through this performance report? In your opinion, is this performance report a lead or a lag indicator? Explain.
8. List one key performance indicator for the three other balanced scorecard perspectives. Make sure to indicate which perspective is being addressed by the indicators you list. Are they lead or lag indicators? Explain.
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