Sue Jaski, supervisor of the Karaki Corporation€™s Machining Department, was visibly upset after being reprimanded for her department€™s poor performance over the prior month. The department€™s cost control report is given below:

€œI just can€™t understand all the red ink,€ Jaski complained to the supervisor of another department. When the boss called me in, I thought he was going to give me a pat on the back because I know for a fact that my department worked more efficiently last month than it has ever worked before. Instead, he tore me apart. I thought for a minute that it might be over the supplies that were stolen out of our warehouse last month. But they only amounted to a couple of hundred dollars, and just look at this report. Everything is unfavorable. Direct labor wages and supplies are variable costs; supervision and depreciation are fixed costs; and maintenance and utilities are mixed costs. The fixed component of the budgeted maintenance cost is $12,100; the fixed component of the budgeted utilities cost is $12,800.

Required:
1. Evaluate the company€™s cost control report and explain why the variances were all unfavorable.
2. Prepare a performance report that will help Ms. Jaski€™s superiors assess how well costs were controlled in the MachiningDepartment.

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Karaki Corporation-Machining Department Cost Control Report For the Month Ended June 30 Planning Budget Actual Results Variances Machine-hours Direct labor wages Supplies Maintenance Utilities . Supervision Depreciation Total 42,000 $70,000 $71,400 $1,400 U 21,300 20,100 19,000 41,000 67,000 40,000 20,000 20,100 18,800 41,000 67,000 1,300 U 200 U 0 $236,900 $239,800 $2,900 U