Joe Evans is a line supervisor in the Paint Shop of the Auckland Car Company (ACC). The ACC manufactures cars for the domestic and export markets. Jim Kent is the manager of the Finishing Department, which includes the Paint Shop. It is the end of the first week in August when Kent approaches Evans for help.
Kent: Joe, here are the results for our department for the month of July. I need your help to explain these at the meeting with the plant manager tomorrow. Just look at them. I'm in for a really hard time.
(Evans examines the performance report for the Finishing Department for July, which is shown below.) Evans: Jim, why do you bother with these measures? They're not worth the paper they're written on. We need senior management to understand that when they introduce some decent measures they'll start to some decent results!

Required:
1. Outline the major criticisms of standard costing variances as measures of performance.
2. Use the variance data to provide a brief report on the performance of the Finishing Department.
3. Suggest some alternative performance measures for the Finishing Department that might be useful.

Finishing Department Performance Report for July Direct material: Standard cost $602 450 Material usage variance 3 900 Material price variance* 150 Actual material cost 598 700 Direct labour: Standard cost $393 000 Direct labour efficiency variance 14 000 Direct labour rate variance 4 800 Actual labour cost 383 800 Manufacturing overhead: Applied to production $400 000 Variable overhead efficiency variance 10 000 Variable overhead spending variance 8 000 Fixed overhead volume variance 20 000 Fixed overhead budget variance 30 000 Actual overhead $408 000