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Gamma Company manufacture and sells two products, product A and product B $.$ Gamma Co$,$ CEO has

collected the following information related to budgeted and actual performance for the most recent financial

year. Table I below summarizes the income statement $($budgeted and actual$)$ and table $2$ provides additional

information.

Table I: Income statement

Table $2$ below provides additional information collected for the period:

Table $2$: Additional Information

CEO has approached you to generate business intelligence to enable him to understand division wise

performance of Gamma Company.

Based on the given information estimate:

Estimate $($a$)$ sales volume and mix variance, $($b$)$ selling price variance and $($c$)$ revenue variance for

Gamma company for the period $(3$ marks$)$

II$.$ Estimate $($a$)$ manufacturing variable cost variance, $($b$)$ fixed cost variance and $($c$)$ manufacturing cost

variance for Gamma company for the period $(3$ marks$)$

III. Estimate $($a$)$ non$-$manufacturing cost variance,$($b$)$ total variance for Gamma company for the period $(3$

marks$)$

IV$.$ Assess the performance of $($a$)$ marketing division, and $($b$)$ manufacturing division of Gamma Company

$(1$ mark$)$

Section Twa $(10$ marks$)$

Whta Company produces fentilizers. The CEO of the Company is responsible for the overall performance of

the compans. The tinancial performance of Alpha Company during the most recent year is shown below in

tatle I and $2.$

Table $1$: Excerpt from the income statement of Company C from the most recent quarter $($in $)$

Table $2$: Balance sheet of Company C at the end of the most recent quarter $($in $)$

Assigument Questions

Assuming that the CEO of Alpha Company is responsible for the profit over investment $($assume company

C as investment center$),$ estimate the annual performance of the company using $($i$)$ economic value added

$($EVA$)$ and $($ii$)$ return on invested capital $($ROIC$)$ as a performance measurement tool. You may assume that

the average cost of capital for Company is $15\%.(3$ marks$)$

If the Board of Directors of Alpha Company laid down the performance benchmark for this year measured

through E:VA as $25,00,000,$ whether the com pany has over performed or underperformed when compared to

the henchmark? $(2$ marks$)$

If the Board of Directors of Alpha Company laid down the performance benchmark for this year measured

througls Return on Invested Capital $($assume that the company assess the performance by taking into account

the ending capital$)$ as $25\%,$ whether the company has over performed or underperformed when compared

with this benchmark? $(2$ marks$)$

What are the key drivers of performance of Alpha Company? How those drivers can be utilized to design

the mmungement control system for Company C$?(3$ marks$)$

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