Freemont Corporation–Machining Department Cost Control Report For the Month Ended June 30   Actual Results Planning Budget Variances Machine-hours 42,000 40,000     Direct labor wages $ 74,000 $ 72,400 $ 1,600 U Supplies 22,300 20,800 1,500 U Maintenance 22,500

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Frank Weston, supervisor of the Freemont Corporation’s Machining Department, was visibly 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
  Actual Results Planning Budget Variances
Machine-hours 42,000 40,000    
Direct labor wages $ 74,000 $ 72,400 $ 1,600 U
Supplies 22,300 20,800 1,500 U
Maintenance 22,500 20,500 2,000 U
Utilities 20,200 19,100 1,100 U
Supervision 43,000 43,000 0  
Depreciation 71,000 71,000 0  
Total $ 253,000 $ 246,800 $ 6,200 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 for a fact that my department worked more efficiently last month than it has ever worked before. Instead, he tore me apart. I thought for a minute that 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 $12,900; the fixed component of the budgeted utilities cost is $13,000.

 

Required:

2. Complete the performance report that will help Mr. Weston’s superiors assess how well costs were controlled in the machining department. (Round your intermediate calculations to 2 decimal places. 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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