To respond to increased competition and a reduction in profitability, the nationwide law firm of O'Brien New & Cave recently instituted a responsibility accounting system. One of the several responsibility centers established was the Civil Litigation Division. This division is treated as a cost center for control purposes. In the first year (2010) after the new system was established, the responsibility report for the Civil Litigation Division contained the following comparisons:

For 2010, the division projected it would handle 3,000 cases, but its actual case load was 2,970.
a. What are the major weaknesses in the preceding responsibility report?
b. Recast the responsibility report in a more meaningful format for cost control evaluation.
c. If O'Brien New & Cave uses a management-by-exception philosophy, which costs are likely to receive additional investigation?Explain.

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Budget Actual Variance Variable costs Professional abr$3,000,000 2,820,000 $180,000F Travel Supplies 150,000 300,000 120,000 270,000 30,000 F 30,000 F Fixed costs Professional labor Facilities Insurance 1,200,000 750,000 240,000 $5,640000 15,000 U 45,000 U 2340006,000 F $186,000 F 1,215,000 795,000 Total $5454000 $186000 F