Ultratech Company's headquarters are a "campus" in the outskirts of San Francisco, California. For the convenience of its employees and to help preserve the environment, the company operates a motor pool of buses running between points in San Francisco and the company's Campus. The motor pool operated with 20 vehicles until February, when an additional bus was acquired and put in service. The motor pool furnishes gasoline, oil, and other supplies for its buses. A mechanic does routine maintenance and minor repairs. Major repairs are performed at a nearby commercial garage. Each year, the supervisor of the motor pool prepares an annual budget, which is reviewed by the company's management and approved after suitable modifications. The following cost control report shows actual operating costs for March of the current year compared to one- twelfth of the annual budget. Ultratech Co. Motor Pool Cost Control Report For the Month Ended March 31 Annual Monthly budget (1/12March (Over) Budget of annual budget) Actual Under Budget Miles Buses Gasoline Oil, Parts, Minor Repairs Outside Repairs Insurance Salaries and Benefits Vehicle Depreciation 600,000 20 $96,000 30,000 9,600 18,000 103,320 48,000 0,00058,000 21 $8,000$8,970 2,840 980 1,625 8,610 4,200 20 2,500 800 1,500 8,610 4,000 $ (970) (340) 180 125 0 200 Total 304,920 $25,410 $27,225 $ (1,815) The annual budget was based on the following assumptions: a. $0.16 per mile for gasoline b. $ 0.05 per mile for oil, minor repairs, and parts c. $ 480 per bus per year for outside repairs. d. $ 900 per bus per year for insurance e. $ 8,610 per month for salaries and benefits. f. $ 2,400 per bus per year for depreciation. The supervisor of the motor pool, Ralph Kramden, is unhappy with the report, claiming it paints an unfair picture of the motor pool's performance. He has asked for your help preparing for a meeting with management in which he believes his performance will be criticized as a result of the variances shown in the Cost Control Report