Boyne University offers an extensive continuing education program in many cities throughout the state. For the convenience
Question:
The following cost control report shows actual operating costs for March of the current year compared to the planning budget for March.
The planning budget was based on the following assumptions:
a. $0.15 per mile for gasoline.
b. $0.04 per mile for oil, minor repairs, and parts.
c. $75 per automobile per month for outside repairs.
d. $100 per automobile per month for insurance.
e. $7,540 per month for salaries and benefits.
f. $250 per automobile per month for depreciation.
The supervisor of the motor pool is unhappy with the report, claiming it paints an unfair picture of the motor pool's performance.
Required:
1. Prepare a new performance report for March based on a flexible budget that shows spending variances.
2. What are the deficiencies in the original cost control report? How does the report that you prepared in requirement 1 overcome these deficiencies? (CMA, adapted)
Step by Step Answer:
Managerial Accounting for Managers
ISBN: 978-1259578540
4th edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison