PROBLEM 10-10. Performance report The Customer Support Department at Silvan.

com budgeted for the following costs in June assuming 40 customer consultants responding to 10,000 customer calls.

Salaries of customer consultants $120,000 Salaries of supervisors 18,000 Office space charge 5,000 Depreciation on equipment 4,000 Total $147,000 The department is located in a wing of the company's new office building and has space to accommodate extra customer consultants. Each customer consultant works at a computer/telecommunications center. Depreciation on equipment relates to the equipment used by each customer consultant.

During the month of June, the department handled 12,000 customer calls and incurred the following costs:

Salaries of customer consultants $160,000 Salaries of supervisors 17,500 Office space charge 5,000 Depreciation on equipment 5,000 Total $187,500 Required

a. Making assumptions about fixed and variable costs, prepare a performance report comparing actual costs with flexible budget costs applicable to handling 12,000 customer calls.

b. List possible causes for significant variances in the performance report.

c. In addition to the variances calculated above, what nonfinancial measures could be used to evaluate the Customer Support Department?