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MC 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:
| Category | Budget this year | Actual this year | Actual last year | Market expert notes |
|---|---|---|---|---|
| Sales volume (units) | 500 | 300 | 400 | The entire market has decreased by 25% compared to last year. The product will be obsolete in four years |
| Sales revenue | $50,000 | $28,500 | $40,000 | Rivalry in the market saw selling prices fall by 10% |
| Total material cost | $10,000 | $6,500 | $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