Page 194 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Unit 9: Performance Measurement Systems

Department Performance Report Notes
S Company Performance Report
Dept. Prod. Dept. X Current Month - Responsibility of Year
January to date
Actual Planned Var. Amt. % Description Actual Variance
Controllable Planned Amount %
87,500 1,00,000 12,500* 13* Dept. output in units
Raw Material A:
1,76,000 1,75,000 1,000* 1* Units
32,200 35,000 200* 1* Cost
Direct Labour:
35,357 35,000 357* 1* Hours
` 1.96 ` 2.00 ` 0.04 2 Avg. wage rate
69,300 70,000 700 1 Cost
10,000 10,000 - - Salaries
3,740 3,800 60 2 Indirect materials
7,550 7,250 300 4* Indirect labour
560 1,000 440 44 Miscellaneous
21,850 22,050 200 1 Sub-total
Service Usage:
530 480 50* 10* Kilowatt hours (000’s)
Direct repair hours
72 60 12* 20*
1,26,350 1,27,050 700 1 Grand total
Non-Controllable
2,000 2,000 - - Depreciation
500 500 - - Insurance
200 200 - - Taxes
2,700 2,700 - - Total non controllable
* Unfavourable variances

Comments:
1. Output was 13% below the planned lever due to production scheduling pull back to accommodate
5000 unit unfavourable sales volume variance; the department met its production schedule as
adjusted.
2. Unfavourable variances in service usage should be carefully investigated to determine underlying
causes.
To have the maximum benefit, the monthly report should be designed to indicate the performance
of each individual having supervisory responsibility. A well-designed control report should be
completely integrated i.e., each schedule should look on a responsibility basis so that (i) major
variation may be traced to the source of the problem, and (ii) the various segments comprise
within themselves a complete report. Please, refer to the illustration above. Performance reports
SP manufacturing company.

Distribution of the monthly performance report (and its segments) should follow essentially
the same pattern as the annual profit budget plan. Certain executives need the complete monthly
performance report. Other members of the management only need those schedules related to
their particular responsibility centers. Lower levels of management may receive only one of the
detailed segments. On the other hand, the higher the level of management, the greater the need
for summaries, yet these summaries must be supported by adequate detail to identify the
particular aspects of operations.

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