Darien Garcia owns a chain of travel goods stores. Last year, his sales staff so

Question

Darien Garcia owns a chain of travel goods stores. Last year, his sales staff sold 16,000 suitcases at an average sale price of $140. Variable expenses were $105 per suitcase and the total fixed expenses were $150,000. This year, the chain sold more expensive product lines. Sales were 14,000 suitcases at an average price of $240. Production cost of the more expensive line totaled $190 per suitcase. The total fixed expenses were the same both years. Garcia evaluates the chain manager by comparing this year's income with last year's income.

Requirement 1. Prepare a performance report for this year. How would you improve Garcia's performance evaluation system to better analyze this year's results?

Explanation / Answer

2)Since the standalone figure of current year cannot be evaluated without comparing with either past result or industry ,The performance result should also include the past year result along with percentage increase or decrease in result.

In comparing the figures for this year with last year ,it is calculated that net operating income has increase by 34.15% from last year .along with 25% increase in contribution margin ratio

so overall company has better performed in current year

Performance Report for Current Year Sales   3,360,000    [14000*240] less:Variable cost 2,660,000     [14000*190] conribution margin 700,000 LesS:fixed cost -150,000 Net operating Income 550,000

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