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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