The financial results for one of the subunits of Factory Six Racing is presented in...
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Accounting
The financial results for one of the subunits of Factory Six Racing is presented in the partially completed performance evaluation report below.
| Subunit - CobraST |
Actual |
Flexible Budget | Flexible Budget Variance (U or F) |
Percentage* Variance (U or F) |
| Sales | $243,000 | $225,000 |
|
|
| Cost of goods sold | 130,000 | 125,000 |
|
|
| Gross margin | $113,000 | $100,000 |
|
|
| Operating expenses | 26,000 | 25,000 |
|
|
| Operating income before service department charges | $87,000 | $75,000 |
|
|
| Service department charges (allocated) | 17,500 | 12,500 |
|
|
| Operating income | $69,500 | $62,500 |
|
|
|
|
|
|
|
|
* Flexible budget variance/Flexible budget
i. Complete the performance report rounding to two decimal places.
ii. Based on the data presented, what type of responsibility center is this subunit?
iii. Which items should be investigated if part of management's decision criteria is to investigate all variances equal to or exceeding $5,000 and exceeding 10% (both criteria must be met)?
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