CP 22-3 variance interpretation You have been asked to investigate some cost problems in the Assembly Department of Ru thenium Electronics Co, a consumer electronics company. To begin your investigation, you have obtained the following budget performance report for the department for the last quarter Ruthenium E ectronics Cor- Assem bly Department Quarterly Budget Performance Report Standard Actual Quantity at Standard Quantity Standard Rates Rates Direct labor $157,500 70,000 U Direct materials 87500 U 297,500 $157 S00 U 55.000 The following reports were also obtained Ruthenium Electronics Co.-Pu rchasing Department Quarterly Budget Performance Report Actual Quan at Quantity at Variance Actu -552,500 F $437,500 Direct materials Ruthenium Electronics Co. Fabricat on Department Performance Report Quantity at Quantity at Variances Standard Rates -$42,000 F $203 000 140,000 Direct materials -S42.000 F $343,000 Total You also interviewed the Assembly Department supervisor. Excerpts from the interview follow Q: What explains the poor performance in your department? isten, you've got to understand what it's been like in this department recently. Lately, seems no matter how hard we try, we can't seem tomake the rm not sure what is going on but weve been having a lot of o what kind of problems? At well for instance, al this quarter we've been rom the and the parts just didn't fit together very well rm not sure what is going on, but during most of ths quarter and had to scrap and sort parts ust to get eur assemblies put together, Naturally, al this takes time material, And that's not al Go on. Au dis quarter, the work that wewn receiving formthe maybe stuff that comes Fabrication can't be assembled. The fabrication sal wrong As a around 20% of the in form Naturaly, ths has just shot our quantity variances. had to and tewarkalot of the stuff. Interpret the variance reports inlight ofthecomments by the Assembly Department supervisor