Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system.
A report for the company's Assembly Department for the month of March follows:
Assembly Department
Cost Report
For the Month Ended March 31 Actual Results Planning Budget Variances Machine-hours 25,000 30,000 Variable costs: Supplies $ 7,500 $ 8,100
$ 600 F Scrap 23,800 25,500 1,700 F Indirect materials 72,200 84,000 11,800 F Fixed costs: Wages and salaries 70,300 67,000 3,300 U
Equipment depreciation 97,000 97,000 â Total cost $ 270,800 $ 281,600 $ 10,800 F
After receiving a copy of this cost report, the supervisor of the Assembly Department stated, âThese reports are super. It makes me feel really good to see how well things are going in my department. I canât understand why those people upstairs complain so much about the reports.â
For the last several years, the companyâs marketing department has chronically failed to meet the sales goals expressed in the companyâs monthly budgets.
Required:
1. The companyâs president is uneasy about the cost reports, identify at least two reasons.
2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs?
3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach.
4. Were costs well controlled in March?
Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system.
A report for the company's Assembly Department for the month of March follows:
| Assembly Department Cost Report For the Month Ended March 31 | |||||||
| Actual Results | Planning Budget | Variances | |||||
| Machine-hours | 25,000 | 30,000 | |||||
| Variable costs: | |||||||
| Supplies | $ | 7,500 | $ | 8,100 | $ | 600 | F |
| Scrap | 23,800 | 25,500 | 1,700 | F | |||
| Indirect materials | 72,200 | 84,000 | 11,800 | F | |||
| Fixed costs: | |||||||
| Wages and salaries | 70,300 | 67,000 | 3,300 | U | |||
| Equipment depreciation | 97,000 | 97,000 | â | ||||
| Total cost | $ | 270,800 | $ | 281,600 | $ | 10,800 | F |
After receiving a copy of this cost report, the supervisor of the Assembly Department stated, âThese reports are super. It makes me feel really good to see how well things are going in my department. I canât understand why those people upstairs complain so much about the reports.â
For the last several years, the companyâs marketing department has chronically failed to meet the sales goals expressed in the companyâs monthly budgets.
Required:
1. The companyâs president is uneasy about the cost reports, identify at least two reasons.
2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs?
3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach.
4. Were costs well controlled in March?
Related questions
Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system.
A report for the company's Assembly Department for the month of March follows:
| Assembly Department Cost Report For the Month Ended March 31 | |||||||
| Actual Results | Planning Budget | Variances | |||||
| Machine-hours | 15,000 | 20,000 | |||||
| Variable costs: | |||||||
| Supplies | $ | 10,200 | $ | 10,800 | $ | 600 | F |
| Scrap | 36,400 | 39,000 | 2,600 | F | |||
| Indirect materials | 104,600 | 124,500 | 19,900 | F | |||
| Fixed costs: | |||||||
| Wages and salaries | 81,100 | 76,000 | 5,100 | U | |||
| Equipment depreciation | 106,000 | 106,000 | â | ||||
| Total cost | $ | 338,300 | $ | 356,300 | $ | 18,000 | F |
After receiving a copy of this cost report, the supervisor of the Assembly Department stated, âThese reports are super. It makes me feel really good to see how well things are going in my department. I canât understand why those people upstairs complain so much about the reports.â
For the last several years, the companyâs marketing department has chronically failed to meet the sales goals expressed in the companyâs monthly budgets.
Required:
1. The companyâs president is uneasy about the cost reports, identify at least two reasons.
2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs?
3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach.
4. Were costs well controlled in March?
prepare a new performance report for the quarter, (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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Required 2
Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system.
A report for the company's Assembly Department for the month of March follows:
| Assembly Department Cost Report For the Month Ended March 31 | |||||||
| Actual Results | Planning Budget | Variances | |||||
| Machine-hours | 15,000 | 20,000 | |||||
| Variable costs: | |||||||
| Supplies | $ | 9,300 | $ | 9,900 | $ | 600 | F |
| Scrap | 32,200 | 34,500 | 2,300 | F | |||
| Indirect materials | 93,800 | 111,000 | 17,200 | F | |||
| Fixed costs: | |||||||
| Wages and salaries | 77,500 | 73,000 | 4,500 | U | |||
| Equipment depreciation | 103,000 | 103,000 | â | ||||
| Total cost | $ | 315,800 | $ | 331,400 | $ | 15,600 | F |
| After receiving a copy of this cost report, the supervisor of the Assembly Department stated, âThese reports are super. It makes me feel really good to see how well things are going in my department. I canât understand why those people upstairs complain so much about the reports.â For the last several years, the companyâs marketing department has chronically failed to meet the sales goals expressed in the companyâs monthly budgets. Required: 1. The companyâs president is uneasy about the cost reports, identify at least two reasons. 2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs?3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach. 4. Were costs well controlled in March? | |||||||
