ou are a county supervisor for Firwood County and are preparing for the monthly supervisor meeting where the operations of various units are reviewed. One of the units that the county government operates is a motor pool with 50 vehicles. The motor pool furnishes gasoline, oil, and other supplies for the cars and hires two mechanics who do routine maintenance and minor repairs. Major repairs are done at a nearby commercial garage. A department manager oversees the operations. Each year, the manager of the motor pool prepares a master budget for the motor pool. Depreciation on the automobiles is recorded in the budget to determine the costs per mile. One factor in the performance evaluation of the motor pool manager is actual expenses compared to budgeted expenses. The following schedule presents the master budget for the year and for the month of September. It also includes the actual September results along with the variances relative to the master budget:
Problem 17-61 (Static) Flexible Budget (LO 17-6)
You are a county supervisor for Firwood County and are preparing for the monthly supervisor meeting where the operations of various units are reviewed. One of the units that the county government operates is a motor pool with 50 vehicles. The motor pool furnishes gasoline, oil, and other supplies for the cars and hires two mechanics who do routine maintenance and minor repairs. Major repairs are done at a nearby commercial garage. A department manager oversees the operations.
Each year, the manager of the motor pool prepares a
The following schedule presents the master budget for the year and for the month of September. It also includes the actual September results along with the variances relative to the master budget:
| FIRWOOD COUNTY | ||||
| Motor Pool Budget Report for September | ||||
| Annual Master Budget | One-Month Master Budget | September Actual | Over- or (Under-) Budget | |
|---|---|---|---|---|
| Gasoline | $ 226,800 | $ 18,900 | $ 18,600 | ($300) |
| Oil, minor repairs, parts, and supplies | 20,160 | 1,680 | 1,690 | 10 |
| Outside repairs | 15,120 | 1,260 | 1,270 | 10 |
| Insurance | 33,600 | 2,800 | 2,814 | 14 |
| Salaries and benefits | 168,000 | 14,000 | 13,800 | (200) |
| Depreciation | 147,840 | 12,320 | 12,100 | (220) |
| Total cost | $ 611,520 | $ 50,960 | $ 50,274 | ($686) |
| Total miles | 1,176,000 | 98,000 | 88,200 | |
| Cost per mile | $ 0.52 | $ 0.52 | $ 0.57 | |
| Number of vehicles | 50 | 50 | 48 |
You are aware that the motor pool manager's annual evaluation and prospects for promotion will be discussed at the meeting and that supporters will point to the fact that the September results indicate good performance. You have not formed an opinion of the motor pool manager's performance, but you would like to be prepared for the discussion you know will take place.
Required:
a. Based on the Motor Pool Budget Report for September provided above, prepare an analysis of the manager's performance that you believe provides a reasonable assessment.
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