Engineers Education Association (EEA) is a volun- teer membership organization providing educational and professional services to its members. The professional staff is organized into four divisions with a total of 14 operating departments. EEA adopted an annual budget program many years ago as a means for planning and controlling activities. Each department of EEA prepares an annual budget in consultation with its respective volunteer committee(s). After a series of reviews by both the professional staff and the volunteer structure, the budget is adopted. The professional staff is expected to comply with the budget in conducting its activities and operations. The EEA's accounting department generates monthly income statements that present actual performance as compared to budget for each department of EEA. The November 2007 statement for the publications department is reproduced in the next column. Accompanying the report this month was a memorandum from EEA's president, Daniel Riley, which is presented on the following page.

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Required: a. The monthly income statements prepared by EEA's accounting department for each depart- ment of EEA are a form of communication. 1. Explain why the departmental income statements are considered a form of communication. 2. In terms of the format of the income state- ment presented for the publications depart- ment, evaluate EEA's departmental income statement as a communication device. b. Paige stated that all significant variances should be analyzed because some positive variances are not favorable. Discuss why EEA's departments should be analyzing all significant variances, both positive (favorable) and negative (unfavor- able). As support for your answer, identify a positive variance from the publications depart- ment's income statement that may not be favor- able to EEA's operations and explain why. c. Recommend a course of action that Paige or Franklin could take to encourage Riley to have all significant variances reviewed.