Global Enterprise

FABUS’ actual sales unit and sales values exceed budgeted amounts. However, as these are intercompany sales, it should not be a factor in evaluating management or subsidiary performance. FABNETH and FABBRZ’s actual sales unit is lower than budgeted, however, their actual sales value is higher than budgeted. This is due to the higher actual sales price than budgeted sales price. As these are all intercompany sales to the SALES companies, it should not be used to evaluate management or subsidiary performance. There are also some variances in the cost of raw materials. As these raw materials are purchased from the GLE FIBER company, they should not be a factor in performance evaluation. The transfer price of $1,000 per ton is higher than market price when the price dropped from $1,050 per ton to $910 per ton.

SALUS’ sales are all intercompany. As such the variance in sales units and sales values should not be a performance evaluation factor. The actual cost of raw material is higher than budgeted. This is also an intercompany transaction and should not be used in performance evaluation. SALNETH and SALWG’s actual sales unit is higher than budgeted. However, SALNETH’s actual sales value is lower than budgeted. This is due to the lower actual sales price than budgeted sales price. Since these sales are not intercompany sales, the variance should be used to evaluate both the manager and the subsidiary. The actual cost of raw material is higher than budgeted for both companies. Since these are purchased from GLE FABRIC companies, variances should not be used for performance evaluation.