Today is 1 December 2022. You receive the following email: From: Savta Shama, Finance Manager To: Finance Officer Subject: Variances and key performance indicators (KPS) The Senior Management Team (SMT) has asked for a report on some of the production variances and KPIs for the Enamelling Department in November. Table 1 (attached), includes the relevant production variances, and Table 2 (attached) shows the performance indicator (KPI) dashboard for the department for the month. George Crystal, Head of Enamelling.. has told me: As a trial, a new type of frit (which is dry enamel powder) was purchased and used in production from early November. This new frit requires a thinner application and less firing time in the furnace then the frit we usually use. It does take our skilled employees longer to spray onto the cock-boxes because it requires a more careful application, although, as a result, there is less wastage. If the trial is successful, this new type of frit will be used in the future. The standards have not been amended to reflect the type of frit on the production process. Due to an increased sales forecast for the first half of 2023, production in November was increased above the original budget. Overtime premiums paid were higher than expected in the month. Because of the increase in production, new trainees were employed on 15 November. This was earlier than originally intended. These trainees will start our training programme in January but were trained on the job to load and unload the furnaces. Trainees are paid a lower hourly rate man qualified employees. A new wind turbine was installed at the Production Facility during October and became operational on 15 November. We pay less for self-generated power than for power purchased from the national grid Please prepare a report to the SMT which explains: 1. What the variances shown in Table 1 mean and possible reasons for each variance, based on what George has told me and the KPI dashboard in Table 2. [64 marks] 2. What these variances indicate about the overall impact on profit in the month of using the new type of frit. [12 marks] Our training programme includes a course of tuition sessions at an external training college. Each trainee will take an examination at the end of the course, which they need to pass to gain trade association membership. We have decided to use a new external training college for 2023. The SMT has asked for suggestions of KPIs to monitor the performance of this college to help it decide whether to continue using it in 2024. Please include in your report to the SMT: 3. Suggestions of two KPIs to monitor the performance of the new external training college during 2023. Please explain how each KPI would be measured and why it would be. Savita Sharma Finance Manager FireWorks [24 marks] Table 1: Variances for the Enamelling Department for November 2022 Variance Raw material price Raw material usage Direct labour rate Direct labour idle time Direct labour efficiency Variable overhead expenditure Variable overhead efficiency Notes: Idle time is not budgeted for. Variable overheads are absorbed on furnace hours. The mix of grills enamelled during the month was in line with the budgeted production mix. Table 2: KPI dashboard for the Enamelling Department for November 2022 % Electricity used that is self generated 100% at 50% 0% B$ 20.640 Adverse 15,480 Favourable 3.900 Favourable 4,000 Adverse 1,760 Adverse 344 Favourable 7.344 Favourable Week 1 Week 2 Week 3 Week 4 -Actual-Target 16% 10% Training (50%) Spraying equipment faut (10%) 15 Direct labour idle time 10 % Frit wastage Week 1 Week 2 Week 3 Week 4 Actual Target Waiting for raw materials (14%) Bottleneck within the department (16%) Today is 1 December 2022. You receive the following email: From: Savta Shama, Finance Manager To: Finance Officer Subject: Variances and key performance indicators (KPS) The Senior Management Team (SMT) has asked for a report on some of the production variances and KPIs for the Enamelling Department in November. Table 1 (attached), includes the relevant production variances, and Table 2 (attached) shows the performance indicator (KPI) dashboard for the department for the month. George Crystal, Head of Enamelling.. has told me: As a trial, a new type of frit (which is dry enamel powder) was purchased and used in production from early November. This new frit requires a thinner application and less firing time in the furnace then the frit we usually use. It does take our skilled employees longer to spray onto the cock-boxes because it requires a more careful application, although, as a result, there is less wastage. If the trial is successful, this new type of frit will be used in the future. The standards have not been amended to reflect the type of frit on the production process. Due to an increased sales forecast for the first half of 2023, production in November was increased above the original budget. Overtime premiums paid were higher than expected in the month. Because of the increase in production, new trainees were employed on 15 November. This was earlier than originally intended. These trainees will start our training programme in January but were trained on the job to load and unload the furnaces. Trainees are paid a lower hourly rate man qualified employees. A new wind turbine was installed at the Production Facility during October and became operational on 15 November. We pay less for self-generated power than for power purchased from the national grid Please prepare a report to the SMT which explains: 1. What the variances shown in Table 1 mean and possible reasons for each variance, based on what George has told me and the KPI dashboard in Table 2. [64 marks] 2. What these variances indicate about the overall impact on profit in the month of using the new type of frit. [12 marks] Our training programme includes a course of tuition sessions at an external training college. Each trainee will take an examination at the end of the course, which they need to pass to gain trade association membership. We have decided to use a new external training college for 2023. The SMT has asked for suggestions of KPIs to monitor the performance of this college to help it decide whether to continue using it in 2024. Please include in your report to the SMT: 3. Suggestions of two KPIs to monitor the performance of the new external training college during 2023. Please explain how each KPI would be measured and why it would be. Savita Sharma Finance Manager FireWorks [24 marks] Table 1: Variances for the Enamelling Department for November 2022 Variance Raw material price Raw material usage Direct labour rate Direct labour idle time Direct labour efficiency Variable overhead expenditure Variable overhead efficiency Notes: Idle time is not budgeted for. Variable overheads are absorbed on furnace hours. The mix of grills enamelled during the month was in line with the budgeted production mix. Table 2: KPI dashboard for the Enamelling Department for November 2022 % Electricity used that is self generated 100% at 50% 0% B$ 20.640 Adverse 15,480 Favourable 3.900 Favourable 4,000 Adverse 1,760 Adverse 344 Favourable 7.344 Favourable Week 1 Week 2 Week 3 Week 4 -Actual--Target 16% 10% Training (50%) Spraying equipment faut (10%) 15 Direct labour idle time 10 % Frit wastage Week 1 Week 2 Week 3 Week 4 Actual - Target Waiting for raw materials (14%) Bottleneck within the department (16%)