At the end of June the manager of the B.C. manufacturing plant was provided with the following variance analysis report.

The manager immediately called the production supervisor, demanding an explanation for the large unfavourable variance for the quarter. The production supervisor was puzzled. He thought the cost- cutting measures they had incorporated were beginning to work. He certainly wasn't expecting such a large discrepancy.
The budget that was created in Chapter 10 was used to establish the standard rates the plant was using with its normal costing system. They are summarized below.

Other relevant information:
1. A total of 400,000 kg of direct materials were purchased during the quarter at a cost of $1.55 per kilogram.
2. A total of 380,990 kg of direct materials were used in production to manufacture 357,000 units.
3. Payroll recorded 88,325 direct labour hours at an average cost of $17.80 per hour.
Instructions
Do you agree with the plant manager that the production supervisor performed poorly, as might be indicated by the large unfavourable variance? Explain fully. Include in your response calculations of all production variances.

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Favourable (F)/ Unfavourable (U) Budget Actual Variance 19,000 Production in units Production costs: 338,000 357,000 Direct material Direct labour Variable overhead costs Fixed overhead costs $ 562,009 1,521,000 126,750 195,195 $2,404,954 $ 571,484 1,572,185 132,488 192,612 $2,468,769 $ (9,475) (51,185) (5,738) 2,583 $(63,815) Total production costs Volume 1.10 kg per unit 0.25 hour per unit Cost Direct material Direct labour Predetermined overhead rate: $1.50 per kg $18.00 per hour Variable Fixed 0.25 hour per unit 0.25 hour per unit $1.50 per hour $2.31 per hour