Carol Morgan manages the production division of Adams Corporation. Ms. Morgans responsibility report for the month of August follows:

	Budget			Actual			Variance
Controllable costs
Raw materials	$	28,090		$	33,390		$	5,300	U
Labor		11,340			16,920			5,580	U
Maintenance		3,300			5,100			1,800	U
Supplies		1,850			900			950	F
Total	$	44,580		$	56,310		$	11,730	U

The budget had called for 5,300 pounds of raw materials at $5.30 per pound, and 5,300 pounds were used during August; however, the purchasing department paid $6.30 per pound for the materials. The wage rate used to establish the budget was $21.00 per hour. On August 1, however, it increased to $24.00 as the result of an inflation index provision in the union contract. Furthermore, the purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Morgan to use 110 hours of overtime at a $36.00 rate. The projected 540 hours of labor in the budget would have been sufficient had it not been for the 110 hours of overtime. In other words, 650 hours of labor were used in August.

Required

1. When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because it held her accountable for materials and labor variances that she did not control. Is she correct?

2. Calculate the variances of the items Ms. Morgans controlled during the period.

Complete this question by entering your answers in the tabs below. Required A Required B When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because it held her accountable for materials and labor variances that she did not control Is she correct or incorrect? Complete this question by entering your answers in the tabs below. Required A Required B Calculate the variances of the items Ms. Morgan's controlled during the period. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Variances Total