Read the case study again and identify the points at which Fiona McTaggarts actions match the principles
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Read the case study again and identify the points at which Fiona McTaggart’s actions match the principles of reporting set out in this chapter.
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Case study: evaluating and reporting performance Fiona McTaggart now explains a situation where she prepared performance reports using flexible budgets and also shows how the performance report appeared in each case. FIONA: My client was in a manufacturing business which produced hand-crafted cane furniture. I was asked to devise a monthly performance reporting system which would provide performance measurement of the manufacturing activity. Three levels of reporting were required. The managing director required a brief summary of any matter requiring executive action but did not want all the details each month. The furniture supervisor needed a much more specific analysis of the performance of the activity as a whole and the relative performance of each employee. There was also a proposal to give each employee a personal performance statement that showed some indication of the average performance of the activity as a whole, without giving individuals access to information which was best kept personal to each employee. The budget was set at the start of the year based on average monthly output of 300 chairs and 80 tables. In practice the actual monthly output varied around this average. I recommended a three-column form of report which would show the original budget for one month's output, the flexible budget showing the costs expected for the actual level of output achieved and the actual costs incurred. I made a list of all the costs incurred in making cane furniture. The main direct costs were materials and skilled labour. Although the employees were employed on full-time contracts, it was useful to identify separately the time they spent in productive activity making the furniture, which I classed as a direct cost, and the time they spent in non- productive activity, which I classed as an indirect cost. I then listed all the indirect costs and subdivided them according to various levels of responsibility. Each employee was responsible for a portion of indirect materials used in
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