Walkon Co manufactures wooden flooring. The company buys timber which it cuts to standard-length boards, sands and polishes to sell on to builders. The variance analysis shown in Table 6.6 has been produced for the production department for the last accounting period.

F = favourable variance; A = adverse variance In response to the variance analysis the production manager has made the following comments:
1. We were experiencing poor staff morale and a high staff turnover so I increased wage rates during the period. I believe that this has improved staff morale and produced a positive benefit to the company.
2. I was able to source an alternative supplier of raw materials. I negotiated a very good price which I believe has saved the company a considerable amount of money.
3. We had a large sanding machine which I felt was not being sufficiently used and was therefore costing the business too much money. I sold this machine and hired a sander only when we needed one.
Required:
Comment on the performance of the production department based upon the variance analysis and the comments from the production manager provided above.

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Table 6.6 $ Material price variance Material usage variance Labour rate of variance Labour efficiency variance Variable overhead expenditure variance Variable overhead efficiency variance Fixed overhead expenditure variance 20,000 (F) 25,000 (A) 14,000 (A) 18,000 (F) 13,000 (A) 8,000 (F) 10,000 (F)