Truest plc manufactures metal frames. The variance analysis shown below has been produced for the production department for the last accounting period.

Material price variance 5,000 F

material usage variance 6,000 A

labour rate variance 4,000 A

labour efficiency variance 5,000 F

variable overhead expenditure variance 12,000 A

variable overhead efficiency variance 4,000 A

fixed overhead expenditure variance 5,000 F

F = favourable variance, A = adverse variance

In response to the variance analysis the production manager has made the following comments

1. We were experiencing poor staff morale and a high staff turnover, so I increased wage rates during the period. I believe that this has improved staff morale and produced a positive benefit to the company.

2. I was able to source an alternative supplier for materials. I negotiated a very good price which I believe will save the company a considerable amount of money.

3. We had an additional vehicle for deliveries which was only used when demand was particularly high. I sold this vehicle and hired an additional vehicle only when we needed one.

Required . Comment on the performance of the production department based upon the variance analysis and the comments from the production manager provided.