Reed Company Uses a Standard Costing System for Its Main

Essay

Reed Company uses a standard costing system for its main product. The controller has prepared the performance reports for the month and is not satisfied with the performance shown by Mr. Catesof the book division. This dissatisfaction is conveyed to Mr. Cates at a meeting. His performance report, in very summarized form, is shown below:

Required:
(1) Discuss a better way of presenting a performance report. In the process of the discussion point out weaknesses in the report as shown.
(2) What kind of behavioral implications would the controller's remarks have on Mr.Cates? *includes direct material and direct labor.
Mr. Cates is upset with the report as shown and wonders if there isn't a better way to present the information.