One subunit of Speed Sports Company had the following financial results last mon

Question

One subunit of Speed Sports Company had the following financial results last month EEB (Click the icon to view the financial results) Read the reqirements Product Percentage Actual Budgeted Variance S4 S30,000 S 400,000 312,500 Sales Less: Variable expenses Contribution margin Less: Direct fixed expenses Segment margin Less: Common fixed expenses $ 105,000 87,500 37,500 $ 66,150 $ 50,000[ 25,000 25,000 38,850 ?????%?? 37,500 $ 28,650 Operating income Choose from any list or enter any number in the input fields and then continue to the next question

Explanation / Answer

Solution 1:

Solution 2:

The Performance report includes income statement, Therefore this sub unit must be a profit center.

Solution 3:

Variances to be investigated on the basis of criteria of equal to or exceeding $12,500 and exceeding 16%

1. Contribution margin

2. Segment margin

3. Common fixed expenses

Solution 4:

Managers should investigate High favorable variances and management needs to evaluate unfavorable variances to determine the root cause of the variance.

Note: I have answered first 4 parts of the question as per chegg policy, kindly post separate question for answer of remaining parts.

Particulars Actual Budgeted Variance Percentage Sales $430,000.00 $400,000.00 $30,000.00 F 7.50% Less: Variable Expenses $325,000.00 $312,500.00 $12,500.00 U 4.00% Contribution margin $105,000.00 $87,500.00 $17,500.00 F 20.00% Less: Direct fixed expenses $38,850.00 $37,500.00 $1,350.00 U 3.60% Segment Margin $66,150.00 $50,000.00 $16,150.00 F 32.30% Less: common fixed expenses $37,500.00 $25,000.00 $12,500.00 U 50.00% Operating income $28,650.00 $25,000.00 $3,650.00 F 14.60%

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