Reference no: EM132625043

Below is a performance report that compares budgeted and actual profit in the sporting goods department of Maxwell's Department Store for the month of December.

Maxwell's Department Store

Sporting Goods

Performance Report December 2017

                                            Budget               Actual                  Different

Sales                            $700,000            $775,000           $75,000

Less:

Cost of merchandise         $350,000            $430,000        $80,000

Salaries of Sales staff         $70,000             $78,000        $8,000

Controllable Profit              $280,000             $267,000      ($13,000)

Required

Question a. Evaluate the department in terms of its increases in sales and expenses. Do you believe it would be useful to investigate either or both of the increases in expenses?

Question b. Consider storewide electricity cost. Would this cost be a controllable or a noncontrollable cost for the manager of sporting goods? Would it be useful to include a share of storewide electricity cost on the performance report for sporting goods?