Admin: This is a multi-part question. There are no minimum word counts but you must answer the question in full. Address your response to the Plant Manager.

Discussion Initial Response Due by Wednesday: Killer Kitchens is a small manufacturer of custom kitchen cabinets. You are the Controller and you distributed the monthly variance report (see below table) to the company's managers last week. The Production Manager, Darius James, sent you the following email:

"I just received this variance report for last month's operations. I'm not very pleased with these figures. The variances are too large. If I understand the accounting approach being used here, you assume all production costs are variable to the units produced. Well, I don't believe these costs are variable at all. I think they are fixed costs. When we operate below capacity, the costs really don't go down. I'm being penalized for costs I have no control over. I need this report to be redone to reflect this fact. If anything, the difference between actual and budget is essentially a volume variance. Listen, I know that you are a team player but you really need to reconsider your assumptions on this one. Can we discuss this before you send the report to the owner?"

Write an email or memorandum to Darius. It must be in an email or memo format to receive full points. Click here (https://lbcc.instructure.com/courses/80562/files/7878562?wrap=1)

Actions

if you would like a template for emails and memos. Incorporate the following in your memo:

description of variable factory overhead controllable variance; include whether they are fixed or variable

benefits and criticisms of standard costs

concepts of 'relevant range'

timeline for establishing standards (i.e., when are the standards set?)

whether you will reclassify some of the expenses

Discussion Response Due by Saturday: Respond to another student by discussing how they chose to address Darius' concerns.

Expense	Actual	Budgeted Variance Factory Overhead at Actual Production	Controllable Variance	Favorable / Unfavorable
Supplies	$42,000.00	$39,780.00	$(2,220.00)	U
Power and light	$52,500.00	$50,900.00	$(1,600.00)	U
Indirect factory wages	$39,100.00	$30,600.00	$(8,500.00)	U
Total	$133,600.00	$121,280.00	$(12,320.00)	U