Question

One subunit of Winter Sports Manufacturing Company had the following financial results last month: : (Click the icon to view the financial results.) Requirements 1. Complete the performance evaluation report for this subunit. 2. Based on the data presented, what type of responsibility center is the subunit? 3. Which items should be investigated if part of management's decision criteria is to investigate all variances exceeding $3,100 or 13%? 4. Should only unfavorable variances be investigated? Explain. X Reqi varia Data Table humbers. Round the variance percentages to the nearest hundred Winter Sports Manufacturing Company–Running Apparel Subunit Monthly Performance Report For the Month Dire Dire Variance Indir Product Actual Budgeted Variance * Percentage * Utilit Direct materials 15.000 Dep Direct labor Rep Indirect labor Utilities 16,095 $ 15,240 29,200 16,395 24,000 6,285 16,000 25,000 15,000 24,000 7,500 Depreciation Choo Repairs and maintenance $ 107,215 $ 102,500 Total 4 Pa *Be sure to indicate whether each variance is favorable (F) or unfavorable (U). Clear All

Answer 1

ANSWER:

(1)

Product	Actual ($)	Budgeted ($)	Variance ($)	Percentage
Direct material Direct labor indirect labor Utilities Depreciation Repairs & maintenance	16095 15240 29200 16395 24000 6285	15000 16000 25000 15000 24000 7500	1095 U 760 F 4200 U 1395 U 0 1215 F	7% 4.75% 16.8% 9.3% 0 16.2%
Total	107215	102500	4715 U	4.6%

(2)

Responsibility center type: cost center

(3)

indirect labor(16.8%) and repairs & maintenance(16.2%) should be investigated as their variance exceeds 13%

(4)

No, along with unfavorable variances, favorable variances should also be investigated as they might reveal some really helpful information