Question

Instructions Krause Industries has gathered the following information about the actual sales revenues and expenses for its Food Services segment for the most recent year. Performance Report Krause Industries - Food Services Segment For Fiscal Year Ending December 31 Actual Budgeted Less: Variable Expenses: Variable Cost of Goods Sold 201,520 190,000 Variable Operating Expenses 229,632 240,000 Total Variable Expenses 431,152 430,000 Less Direct Fixed Expenses: Fixed Manufacturing Overhead 102,600 100,000 Fixed Operating Expenses 27,000 25,000 Total Direct Fixed Expenses 129,600 125,000 Less Common Fixed Expenses 17,775 16,000 Total Costs $578,527 $571,000 Krause has adopted the policy of having its segment managers investigate fully any unfavorable variances under the control of segment managers which are in excess of 5% of the line-item budget. Under that policy, indicate whether the following items on the Performance Report will be investigated. Select TRUE - if the line item is investigated. Select FALSE if the line item will not be investigated.

Answer 1

Solution:

Performance report
Krause Industries - Food Services Segment
For fiscal year ending Dec 31
Particulars	Actual	Budgeted	Variance		% of Variance from Budget	Investigation Required
Variable expenses:
Variable cost of goods sold	$201,520.00	$190,000.00	$11,520.00	U	6.06%	True
Variable operating expenses	$229,632.00	$240,000.00	$10,368.00	F	4.32%	False
Total Variable expenses	$431,152.00	$430,000.00	$1,152.00	U	0.27%	False
Direct fixed expenses:
Fixed manufacturing overhead	$102,600.00	$100,000.00	$2,600.00	U	2.60%	False
Fixed operating expenses	$27,000.00	$25,000.00	$2,000.00	U	8.00%	True
Total direct fixed expenses	$129,600.00	$125,000.00	$4,600.00	U	3.68%	False
Common fixed expenses	$17,775.00	$16,000.00	$1,775.00	U	11.09%	FALSE
Total costs	$578,527.00	$571,000.00	$7,527.00	U	1.32%	False