The accountant for a subunit of Mountain Sports Company went on vacation before

Question

The accountant for a subunit of Mountain Sports Company went on vacation before completing the subunit's monthly responsibility report. This is as far as she got: EEB (Click the icon to view the responsibility report.) Read the requirements Requirement 1. Complete the responsibility report for this subunit. Mountain-Subunit X Revenue by Product Downhill-FI Downhill-RII Cross-EXI Cross-EXI Snow-LXI Total Actual Flexible Budget Flexible Sales Volume Static Results Variance Budget Variance Budget $ 16,000F 303,000 148,000 303,000 269,500 402,000 $ 1,425,500 $ 327,000 156,000 286,000 257,000 426,000 167,000 288,000 252,000 2,000 U 17,500 U 3,000 1,452,000 Requirement 2. Based on the data presented what type of responsibility center is this subunit?

Explanation / Answer

Solution:

1) Calculation of the Responsibility Report to this Subunit:

2) Based on the Data Presented Revenue Center type of Responsibility Center is this Subunit:

3) Determining which items should be investigated if part of management's decision criteria is to investigate all variances exceeding $12,000:

Using the Flexible Budget Variance as a Guide, None of the items Should be Investigated.

Using the Sales Volume Variance as a Guide, the following Items will be Investigated:

Mountain - Subunit X Revenue by Product Actual Results at Actual Process Flexible Budget Variance Flexible Budget for actual number of Units Sold Sales Volume Variance Static (Master) Budget Downhill - RI $327,000 $8,000 F $319,000 $16,000 F $303,000 Downhill - RII $156,000 $11,000 U $167,000 $19,000 F $148,000 Cross - EXI $286,000 $2,000 U $288,000 $15,000 U $303,000 Cross - EXII $257,000 $5,000 F $252,000 $17,500 U $269,500 Snow - LXI $426,000 $3,000 F $423,000 $21,000 F $402,000 Total $1,452,000 $3,000 F $1,449,000 $23,500 F $1,425,500

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