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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...
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