Suppose that you are the head of production at Tiny Tyke Toy Company and that the accounting department has developed the following cost report for your department for the month of October.

Tiny Tyke Toy Company Manufacturing Cost Report October Original Favorable October (Unfavorable)
Budget Actual Costs Difference Production (units) 10,000 units 11,000 units Direct materials $ 3,000 $ 3,200 $ (200)
Direct labor 12,500 ’ 13,600 (1,100)
Factory overhead Variable:
Utilities 2,000 2,160 (160)
Supplies 500 * 540 (40)
Other 750 830 (80)
Fixed:
Supervisory salaries 4,000 4,000 —
Depreciation 2,500 2,500 —
Other 5,500 5,550 (50)
Total manufacturing costs $30,750 $32,380 $(1,630)
Your boss, who also has a copy of this report, has asked you to write her a memo explaining the “cost overruns” and describing a plan to keep costs more in line with the budget.
Required: Write a memo responding to your boss’s request.