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Hello Sir,
Question :
A profit centre manager claims that the poor performance of her division is entirely due to factors outside
her control.
She has submitted the following table along with notes from a market expert, which she believes explains
the cause of the poor performance:
Sir, isnt the material costs will be just 500 dollar less and therefore flexed will be 9500 and we got the materials in even less amount isnt it a good thing? I dont understand why its a poor performance ?Last year the materials cost $8,000/400 = $20 per unit (and that is what they budgeted for this year).
Suppliers lowered their prices by 5%, and therefore they should have paid less than $20 per unit.
They actually paid $6,500/300 = $21.67 per unit which seems like poor performance 🙂
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