(Evaluating performance) On January 1, 2006, fast-tracker Michael Malicon was promoted to production manager of Salmon Company. The firm purchases raw fish, cooks and processes it, and then cans it in single-portion containers. It sells the canned fish to several wholesalers that specialize in providing food to school lunch programs in the northwest United States and western Canada. All processing is conducted in the firm’s highly automated plant in Seattle, Washington. The production manager’s performance is evaluated on the basis of a comparison of acmal costs to standard costs. Only variable costs that the manager controls are included in the comparison. The cost of fish is noncon- trollable. Standard costs per pound of fish for 2006 follow:

a. Prepare a responsibility report for Michael Malicon for 2006.

b. As his supervisor, evaluate Malicon's performance based on the report in part (a).

c. Malicon believes his 2006 performance is so good that he should be considered for immediate promotion to vice president of operations. Do you agree? Discuss the rationale for your answer.

d. Do you believe that all of the costs shown on Malicon’s responsibility report are truly under his control? Discuss the rationale for your answer. LO.1

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Direct labor $0.25 Repairs 0.05 0.30 0.05 Maintenance Indirect labor Power 0.10 For 2006, the company purchased 5 million pounds of fish and canned 3 million pounds. There were no beginning or ending inventories of raw, in-process, or canned fish for the year. Actual 2006 costs were: Direct labor $600,000 Repairs 160,000 Maintenance 650,000 Indirect labor 155,000 Power 315,000