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Dave is the manager of the Software Sales Department. At the end of the year his department's income statement revealed his direct costs were over budgeted by $25,000. The Director of Operations, Dave's boss, asks Dave to explain why he let the direct costs exceed budget. Which of the following is Dave's best response?
A) Department contribution to overhead = Sales of $191,000 − Cost of goods sold of 134,000 − Direct expenses of $27,800 = $29,200. Then, contribution to overhead as a percent of sales = department contribution to overhead of $29,200 ÷ Sales of $191,000 = 15.29%.
B) Maintenance and cleaning expenses are commonly allocated based on the number or percentage of square feet of floor space occupied. Using the percentage of floor space as the base, the cleaning expense allocated to Department B = cleaning expense of $30,000 × percent of total square footage occupied by Dept. B of 70% = $21,000.
C) Total square footage is 7,500 (5,000 for Department A plus 2,500 for Department B). Department B's percentage is computed as (2,500/7,500) × $3,000 = $1,000.
D) Dave should ask that a responsibility accounting performance report be generated to determine whether the large unfavorable budget variances were within his control before proceeding with the discussion.

Sagot :

Jacuuidn

Answer:

Dave's best response to the Director of Operations' question is option D:

Explanation:

D) Dave should ask that a responsibility accounting performance report be generated to determine whether the large unfavorable budget variances were within his control before proceeding with the discussion.

This response is appropriate because it shows that Dave is willing to analyze the details and understand if the unfavorable variances were within his control or caused by external factors. It demonstrates accountability and a data-driven approach to addressing the issue, which is crucial for effective management. The other options do not directly address the Director's concern about why direct costs exceeded the budget.

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