Mr. Chandler, the production supervisor, bursts into your office, carrying the companys prior

year performance report and thundering, There is villainy here, sir! And I shall get to the bottom

of it. I will not stop searching until I have found the answer! Why is Mr. Richards so down on

my department? I thought we did a good job last year. But Richards claims my production

people and I cost the company $31,500! I plead with you, sir, explain this performance report to

me. Trying to calm Chandler, you take the report from him and ask to be left alone for 15

minutes. The report is as follows:

Required (please answer these. If using Excel please show steps or send excel link please, and thank you)

a. Evaluate the performance report. Is Mr. Richards correct, or is there villainy here?

b. Assume that the sales department is a profit center and that the production and administration

departments are cost centers. Determine the responsibility of each for cost, revenue, and income

variances, and prepare a report reconciling budgeted and actual net income. Your report should

focus on the performance of each responsibility center

DICKENS COMPANY, LIMITED Performance Report For the Prior Year Variance Actual 9,000 Budget 7,500 Unit sales ... $526,500 $450,000 $ 76,500 F 42,750 19,350 192,100 (254,200) 272,300 37,500 15,000 190,000* (242,500) 207,500 5,250 U 4,350 U 2,100 U (11,700) U 64,800 F Sales.... Less manufacturing costs Direct materials. ... Direct labor..... Manufacturing overhead. Total .... Gross profit..... Less selling and administrative expenses Selling (all fixed) ....... Administrative (all fixed) Total ... Net income Performance summary Budgeted net income Sales department variances Sales revenue.... Selling expenses.... Administration department variances. Production department variances.. Actual net income... *Includes fixed manufacturing overhead of $160,000. 52,750 54,785 (107,535) $164,765 50,000 50,000 (100,000) $107,500 2,750 U 4,785 U (7,535) U $ 57,265 F $107,500 $ 76,500 F 2,750 U $ 73,750 F 4,785 U 11,700 U 57,265 F $164,765