Responsibility for fixed cost volume and spending variances Dill Manufacturing Company had an excellent year. The company hired a new marketing director in January. The new director’s great motivational appeal inspired the sales staff, and, as a result, sales were 20 percent higher than expected. In a recent management meeting, the company president, Joe Ezell, congratulated the marketing director and then criticized Gene Hartley, the company’s production manager, because of an unfavorable fixed cost spending variance. Mr. Hartley countered that the favorable fixed cost volume variance more than offset the unfavorable fixed cost spending variance. He argued that Mr. Ezell should evaluate the two variances in total and that he should be rewarded rather than criticized.
Required
Do you agree with Mr. Hartley’s defense of the unfavorable fixed cost spending variance? Explain.