Zhongfang Consumer Products has a small car division that operates as a profit center. Below is a partially completed performance report for the first quarter. How much is the percentage variance for divisional profit margin?

Question

Zhongfang Consumer Products has a small car division that operates as a profit center. Below is a partially completed performance report for the first quarter.  How much is the percentage variance for divisional profit margin?

Quizplus · Accepted Answer

To calculate the percentage variance for divisional profit margin, we need to use the formula: (Actual profit margin - Budgeted profit margin) / Budgeted profit margin * 100. From the given table, we can see that the budgeted profit margin is 15% and the actual profit margin is 10%. Plugging in these values, we get: (10 - 15) / 15 * 100 = -33.33%. Since the actual profit margin is lower than the budgeted profit margin, the variance is unfavorable or "U". Therefore, the correct option is B.

Zhongfang Consumer Products Has a Small Car Division That Operates