Denny Daniels is production manager of the FerrousTec Division of UVA Inc. FerrousTec has limited contact with outside customers and has no sales staff. Most of its customers are other divisions of UVA. All sales and purchases with outside customers are handled by other corporate divisions. Therefore, FerrousTec is treated as a cost center for reporting and evaluation purposes rather than as a revenue or profit center.

Required:
(1) What are Daniels' perceptions of (a) Scott, the controller; (b) corporate headquarters; (c) the cost report; and (d) himself as a production manager?
(2) Discuss how Daniels' perceptions affect his behavior and probable performance as a production manager and employee of UVA.
(3) Identify and explain changes that could be made in the cost reports that would make the information more meaningful and less threatening to the production managers.

Transcribed Image Text:

FerrousTec Division Cost Report for April, 20A ($000s omitted) Master Budget $ 400 560 100 1,060 Actual Cost $ 437 540 134 Excess Cost $37 (20) 34 $51 Aluminum Labor Overhead Total $1060 S.111