You have been asked to investigate some cost problems in the Assembly Department of JeVo Electronics Inc., a consumer electronics company. To begin your investigation, you have obtained the following budget performance report for the department for the last quarter:

The following reports were also obtained:

You also interviewed the Assembly Department supervisor. Excerpts from the interview follow.
Q: What explains the poor performance in your department?
A: Listen, you€™ve got to understand what it€™s been like in this department recently. Lately, it seems no matter how hard we try, we can€™t seem to make the standards. I€™m not sure what is going on, but we€™ve been having a lot of problems lately.
Q: What kind of problems?
A: Well, for instance, all this quarter we€™ve been requisitioning purchased parts from the material storeroom, and the parts just didn€™t fit together very well. I€™m not sure what is going on, but during most of this quarter we€™ve had to scrap and sort purchased parts€”just to get our assemblies put together. Naturally, all this takes time and material. And that€™s not all.
Q: Go on.
A: All this quarter, the work that we€™ve been receiving from the Fabrication Department has been shoddy. I mean, maybe around 20% of the stuff that comes in from Fabrication just can€™t be assembled. The fabrication is all wrong. As a result, we€™ve had to scrap and rework a lot of the stuff. Naturally, this has just shot our quantity variances.
Interpret the variance reports in light of the comments by the Assembly Departmentsupervisor.

JeVo Electronics Inc.-Assembly Department Quarterly Budget Performance Report Standard Quantity at Standard Rates Actual Quantity at Standard Rates Quantity Variances Direct labor Direct materials 78,750 148,750 $227,500 $113,750 192,500 $306,250 $35,000 U 43,750 U 5306250 78,750 Total JeVo Electronics Inc. Purchasing Department Quarterly Budget Performance Report Actual Actual Quantity at Standard Rates Quantity at Actual Rates Price Variance Direct materials $218,750 192,500 $26,250 F JeVo Electronics Inc.-Fabrication Department Quarterly Budget Performance Report Standard Quantity at Standard Rates Actual Quantity at Standard Rates Quantity Variances $21,000 F $21,000 F Direct labor Direct materials 122,500 S101,500 70,000 70,000 0 Total $192,500 171,500