BPP Kit Sep23 - Jun24: Mock exam 1 - Question 13

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: Sales volume Budget this year: 500 Actual this year: 300 Actual last year: 400 The entire market has decreased by 25% compared to last year. Sales revenue Budget this year: $50,000 Actual this year: $28,500 Actual last year: $40,000 Rivalry in the market saw selling prices fall by 10%. Total material cost Budget this year: $10,000 Actual this year: $6,500 Actual last year: $8,000 As demand for the raw materials is decreasing, suppliers lowered their prices by 5%. After adjusting for the external factors outside the manager's control, in which category/categories is there evidence of poor performance? A. Material cost only B. Sales volume and sales price C. Sales price and material cost D. Sales price only I chose the D, however, the correct answer is A. This my workings: Sales volume should be 300 units (400 x 0.75). This is the same as actual sales volume achieved so this was not poor performance. Sales price should be $45,000 ($50,000 x 0.9). Revenue for the year was only $28,500 so this is poor performance. Material cost should be $9,500 ($10,000 x 0.95). Actual material purchased was only $6,500 so this is good performance. Can you tell me where is my mistake? Looking forward to your response, Iniss.