Consider the Following Situation

question 18

Essay

Consider the following situation:
The marketing manager of Gilroy, Inc. accepted a rush order for a nonstock item from a valued customer. The manager filed the necessary paperwork with the production department, and a production manager did the same with purchasing for needed raw materials. Unfortunately, a purchasing clerk temporarily lost the paperwork; by the time it was found, it was too late to order from Gilroy's regular supplier. A new supplier was located that quoted a very attractive price.
The materials soon arrived and were found to be of poor quality, thus giving rise to a favorable materials price variance, an unfavorable materials quantity variance, and an unfavorable labor efficiency variance. These latter two variances, based on normal practice, appeared on the production manager's performance report for the period just ended.
Required:
A. Given that the company uses a responsibility accounting system, should the production manager be penalized for poor performance? Briefly discuss, keeping in mind that a production manager is generally in a very good position to control material usage and labor efficiency.
B. Should anything be done to correct the situation? If "yes," briefly explain.

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Definitions:

Intended Audience

The specific group of people for whom a message, product, or service is directed.

Physically Able

Having the physical capacity and fitness to perform tasks or activities without restriction.

Anti-AIDS Films

Motion pictures specifically designed to spread awareness and educate the public about preventing HIV/AIDS.

Sexually Active

Engaging in sexual activities or behaviors, especially involving genital intercourse.