Frank Weston, supervisor of the Freemont Corporation's Machining Department, was upset after being reprimanded for his department's poor performance over the prior month. The department's cost control report is given below: Freemont Corporation-Machining Department Cost Control Report For the Month Ended June 30 Machine-hours Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total Actual Results Planning Budget 42,000 40,000 $ 88,300 27,800 24,700 22,400 $ 85,600 25,200 22,500 21,300 54,000 54,000 93,000 93,000 $ 310,200 $ 301,600 Variances $ 2,700 U 2,600 U 2,200 U 1,100 U 0 0 $ 8,600 U ‘I just can't understand all of these unfavorable variances," Weston complained to the supervisor of another department. "When the boss called me in, I thought he was going to give me a pat on the back because I know my department worked more efficiently last month than ever before. Instead, he tore me apart. I thought for a minute it might be over the supplies that were stolen out of our warehouse last month. But they only amounted to a couple of hundred dollars, and just look at this report. Everything is unfavorable
Frank Weston, supervisor of the Freemont Corporation's Machining Department, was upset after being reprimanded for his department's poor performance over the prior month. The department's cost control report is given below: Freemont Corporation-Machining Department Cost Control Report For the Month Ended June 30 Machine-hours Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total Actual Results Planning Budget 42,000 40,000 $ 88,300 27,800 24,700 22,400 $ 85,600 25,200 22,500 21,300 54,000 54,000 93,000 93,000 $ 310,200 $ 301,600 Variances $ 2,700 U 2,600 U 2,200 U 1,100 U 0 0 $ 8,600 U ‘I just can't understand all of these unfavorable variances," Weston complained to the supervisor of another department. "When the boss called me in, I thought he was going to give me a pat on the back because I know my department worked more efficiently last month than ever before. Instead, he tore me apart. I thought for a minute it might be over the supplies that were stolen out of our warehouse last month. But they only amounted to a couple of hundred dollars, and just look at this report. Everything is unfavorable
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Required:
2. Complete the performance report that will help Mr. Weston's superiors assess how well costs were controlled in the machining
department.
Note: 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.
Machine-hours
Direct labor wages
Supplies
Maintenance
Utilities
Supervision
Depreciation
Total
Actual
Results
Freemont Corporation Machining Department
Flexible Budget Performance Report
For the Month Ended June 30
Flexible
Budget
42,000
88,300
27,800
24,700
22,400
54,000
93,000
$ 310,200
$
54,000
93,000
$ 147,000
$
U
U
U
0 None
0 None
580 U
Planning
Budget
40,000
85,600
25,200
22,500
21,300
54,000
93,000
$ 301,600
$
Transcribed Image Text:Frank Weston, supervisor of the Freemont Corporation's Machining Department, was upset after being reprimanded for his
department's poor performance over the prior month. The department's cost control report is given below:
Freemont Corporation-Machining Department
Cost Control Report
For the Month Ended June 30
Machine-hours
Direct labor wages
Supplies
Maintenance
Utilities
Supervision
Depreciation
Total
Actual
Results
Planning
Budget
42,000
40,000
$ 88,300
27,800
24,700
$ 85,600
25,200
22,500
22,400
21,300
54,000
54,000
93,000
93,000
$ 310,200 $ 301,600
Variances
$ 2,700 U
2,600 U
2,200 U
1,100 U
0
0
$ 8,600 U
"I just can't understand all of these unfavorable variances," Weston complained to the supervisor of another department. "When the
boss called me in, I thought he was going to give me a pat on the back because I know my department worked more efficiently last
month than ever before. Instead, he tore me apart. I thought for a minute it might be over the supplies that were stolen out of our
warehouse last month. But they only amounted to a couple of hundred dollars, and just look at this report. Everything is unfavorable."
Direct labor wages and supplies are variable costs; supervision and depreciation are fixed costs; and maintenance and utilities are
mixed costs. The fixed component of the budgeted maintenance cost is $17,300; the fixed component of the budgeted utilities cost is
$14,100.
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