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Boyne University offers an extensive continuing education program in many cities throughout the state. For the convenience of its faculty and administrative staff and to save costs, the university operates a motor pool. The motor pool operated with 20 vehicles until February, when an additional automobile was acquired at the request of the university administration. The motor pool furnishes gas, oil, and other supplies for its automobiles. 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 university 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.
1. Prepare a new performance report for March based on a flexible budget that shows spending variances.
2. What are the deficiencies in the original cost control report? How does the report that you prepared in Part (1) above overcome these deficiencies
This solution provides a new performance report and discusses the deficiencies in the original cost control report.