Critiquing a Report, Calculating Spending Varlance and hroughout Uhi sity offers an estensive continuing education program in many hes throuaghout the state. For planni Third Rate unfuwiuns buudget is ersity operates a motor pool. The motor pool’s monthsly on operating zo vehicles; ho the convenience of its faeulty and administrative statf wever, for the month of March the other purchased one additional vehicle. The motor pool furnishes gass repairs. noe and minor pls for its automobiles. A mechanie does routine mainten performed at a nearby commercial garage. year compared to the planning budget for March ntrol report shows actual operating eosts for March of the current Third Rate State University Motor Pool Cost Control Report For the Month Ended March 31 (Over) Under Budget Planning March Actual 63,000. Miles 5000 20 S 7.50 S (1,850) 9 Gasoline S 9.350 2.360 -420- 2.120 7.540 (360) 80 (120) Oil, minor ropairs, parts Outside repairs Insurance Salaries and benetits 7.540 5,000 $25.540 (250) $(2.500) Vehicle depreciation 5,250 Total S28,040 The planning budget was based on the following assumptions: ,a. S0.15 per mile for gasoline. b. So.04 per mile for oil, minor repairs, and parts. C. S75 per automobile per month for outside repairs. d. $100 e. $7.540 per month for salaries and benefits. f. $250 per automobile per month for depreciation. oo per automobile per month for insurance. The supervisor of the motor pool is unhappy with the report, claiming it paints an unfair picture of the motor pool’s performance. Required: 1. Calculate the spending variances for March. 2. What are the deficiencies in the original cost control report? How do your calculations in part (1) above overcome these deficiencies?
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