The Customer Support Department at Silvan.com budgeted for the following costs in June, assuming 35 customer consultants responding to 11,200 customer calls:
Salaries of customer consultants ...........................$160,000
Salaries of supervisors ..........................................30,000
Office space charge ..............................................5,000
Depreciation on equipment .....................................7,000
Total ...........................................................$202,000
The department is located in a wing of the company's new office building and has space to Accommodate extra customer consultants. Each customer consultant works at a computer/ telecommunications center. Depreciation on equipment relates to the equipment used by each customer consultant.
During the month of June, the department handled 14,000 customer calls and incurred the following costs:
Salaries of customer consultants ............................$182,000
Salaries of supervisors ..........................................30,250
Office space charge ...............................................5,000
Depreciation on equipment ......................................8,000
Total ............................................................$225,250
Required
a. Making assumptions about fixed and variable costs, prepare a performance report comparing actual costs with flexible budget costs applicable to handling 14,000 customer calls.
b. List possible causes for significant variances in the performance report.
c. In addition to the variances calculated above, what nonfinancial measures could be used to evaluate the Customer Support Department?