Ms. Garcia, the controller for Romine Inc. is not satisfied with the information coming from manufacturing with regard to the overhead variances. She noted that variable overhead is being applied using a measure that has no relation to any of the components in the variable overhead budget. She has gone to the production manager for some information about how the activity measure should be set. Required: Describe how activity measures should be set and what is happening in the light of changes in the manufacturing environment.

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The Answer of Ms. Garcia, the controller for Romine Inc. is not satisfied with the information coming from manufacturing with regard to the overhead variances. She noted that variable overhead is being applied using a measure that has no relation to any of the components in the variable overhead budget. She has gone to the production manager for some information about how the activity measure should be set. Required: Describe how activity measures should be set and what is happening in the light of changes in the manufacturing environment.

Ms Garcia, the Controller for Romine Inc