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The packaged meal division of the Quick-Foods Corporation produces a variety of a packaged meals like Chicken Korma and Tikka Masala that are shelf stable at room temperature. The company is in its annual merit review process where individual, responsibility center as well as companywide performance is assessed.

Budget* Actual Budget Variance Sales $63,000 $65,800 2,800 Less operating expenses Advertising 9,600 9,000 600 Less production expenses Direct Materials 4,725 4,851 126 Direct labor 8,400 9,250 850 Variable Overhead 14,800 12,000 2,800 Rent on Equipment 4,600 4,000 600 Income from operations 20,875 26,699 5,824 * All variable costs have been flexed for the budget column

Last year when the packaged meal division (i.e. investment center) had a return on investment (ROI) target of 8% and an actual ROI of 8.2 percent, the company paid a yearend bonus of $250 to each employee in the division. This year due to anticipated economic growth in general, the ROI target was raised to 9.5 percent. The division has invested assets at the end of the year of $260,000.

Question: Complete the performance report, then speculate on a possible cause for each variance (except for direct materials and direct labor) and then suggest a follow-up action for those variances.

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