Questions:

Prepare your own Monthly Performance Report in Excel, using the textbook format from Exhibit $9-8(60$ pts$)$

Using the Planning Budget data, what are Osiek's break$-$even units? What does that tell you about the month of May's financial results? $(20$ pts$)$

Including both variable and fixed costs, calculate the Actual Total Cost per Unit. How does that compare with the Planning Budget Total Cost per Unit? Is the variance favorable, or unfavorable? $(10$ pts$)$

What is the major problem with Bart's original Performance Report? $(10$ pts$)$Osiek Motors Case

When Christina Jacobs arrived at her office at Osiek Motors on June $3,$ she was pleased to find the monthly performance report on her desk. Christina's job as division controller was to analyze results of operations each month and to prepare a narrative report on monthly results which she would send to McCadden Enterprises, Osiek's parent company. Osiek Motors was a wholly owned subsidiary of McCadden. The atmosphere at Osiek had been anxious throughout the month of May. Today would provide the opportunity to find out how well Osiek's management had responded to the recent loss of a major customer contract.

Osiek Motors manufactured small electric motors which were sold to household appliance manufacturers. What started as a small, family$-$owned business had grown to become a major player in the industry. It was at this point that McCadden came in with an offer that the Osiek family could not refuse. After the sale of Osiek closed, few changes had been made by McCadden in either processes or staff, as they wanted to see how well the business functioned before making any changes.

Three months after the sale, Christina Jacobs, who had earned her B$.$S$.$ in Accounting from Maryville University, transferred from McCadden's headquarters controller's office to Osiek Motors. She was joined soon after by Savannah Turner, also from McCadden, to be the new general manager at Osiek. Disaster struck soon after. A major appliance maker, and longtime Osiek customer, had cancelled their contract at the end of April and moved production to Southeast Asia.

Because of the lost contract, and the potential negative financial impact, Christina had asked the plant chief accountant, Bart Christopher, to prepare the monthly performance report for May as soon as possible. She was amazed that the report had been prepared so quickly. Back at headquarters it had taken at least a week to receive the monthly reports. Even though Bart had promised that he could prepare the report in a single day with some overtime, she was surprised that he had done so$.$

Osiek had prepared their planning budget for $202$x based on estimated sales and production expenses. Because sales were not seasonal, the monthly budget was simply $1/12$ of the annual planning budget.

No adjustments had been made to the planning budget when the contract had been lost in April.

A glance at the monthly performance report for May confirmed Christina's worst fears. Instead of the budgeted operating profit of $$91,200,$ Osiek had lost $$7,200$ in May. Even with the impact of the lost contract, Christina had expected a better result. The following is a reproduction of Bart's memo to Christina$\mathrm{.}06/02/202$x

$11$:$30pm$

To: Christina Jacobs

From: Bart Christopher

Subject: May $202$x Monthly Performance Report

As promised, here is the performance report for May. I$\text{'}$m sure you will find the bottom line disappointing, but plant performance is excellent! Note that the plant is favorable against budget for every cost category except supervision, and supervision is higher only because the other costs were controlled!

Because I worked late, I$\text{'}$m taking tomorrow off. I have a $9$:$00$am tee time, so I will not be available for any phone calls or questions.

Here is the additional data you requested:

Budgeted costs per unit are $$6$ for Direct Material and $$16$ for Direct Labor, $$4\mathrm{.}89$ for Other Variable Mfg$.$ Costs and $$1\mathrm{.}60$ for Variable Shipping costs.

Actual selling price per unit is $$49$ versus planning budget of $$48.$

$\backslash$table$[[$Osiek Motors$],[$Monthly Performance Report$],[$For the Month of May, $202$x$,$Planning,,$],[$Budget$,$Actual,Variance$],[$Units$,18,000,14,000,(4,000)$