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 th 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 20,000 Variances 15,000 Machine-hours. Variable costs: Supplies $ 9,900 $ 9,300 32,200 $ 600 F 2,300 F Scrap 34,500 Indirect materials. 93,800 111,000 17,200 F Fixed costs: Wages and salaries. 77,500 103,000 73,000 103,000 4,500 U 0 Equipment depreciation Total cost $ 315,800 $ 331,400 $ 15,600 F After receiving a copy of this cost report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel really good to see how well things are going in my department. I can't understand why those people upstairs complain so much about the reports." For the last several years, the company's marketing department has chronically failed to meet the sales goals expressed in the company's monthly budgets. Required: 1. The company's 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 th 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 20,000 Variances 15,000 Machine-hours. Variable costs: Supplies $ 9,900 $ 9,300 32,200 $ 600 F 2,300 F Scrap 34,500 Indirect materials. 93,800 111,000 17,200 F Fixed costs: Wages and salaries. 77,500 103,000 73,000 103,000 4,500 U 0 Equipment depreciation Total cost $ 315,800 $ 331,400 $ 15,600 F After receiving a copy of this cost report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel really good to see how well things are going in my department. I can't understand why those people upstairs complain so much about the reports." For the last several years, the company's marketing department has chronically failed to meet the sales goals expressed in the company's monthly budgets. Required: 1. The company's 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Need help on part 3
Transcribed Image Text: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
20,000
Variances
15,000
Machine-hours
Variable costs:
Supplies
$ 9,900
$ 600 F
$ 9,300
32,200
Scrap
34,500
2,300 F
Indirect materials
93,800
111,000
17,200 F
Fixed costs:
Wages and salaries
Equipment depreciation
77,500
103,000
73,000
103,000
4,500 U
0
Total cost
$ 315,800 $ 331,400 $ 15,600 F
After receiving a copy of this cost report, the supervisor of the Assembly Department stated, "These reports are super. It makes me
feel really good to see how well things are going in my department. I can't understand why those people upstairs complain so much
about the reports."
For the last several years, the company's marketing department has chronically failed to meet the sales goals expressed in the
company's monthly budgets.
Required:
1. The company's 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?
Transcribed Image Text:Complete the new performance report for the quarter, based on Flexible Budget Performance approach. (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.)
Westmont Corporation
Assembly Department
Flexible Budget Performance Report
Actual
Results
For the Month Ended March 31
Revenue and Spending Flexible
Variances
Budget
Activity Variances
Planning
Budget
Machine-hours (q)
Supplies
$
$
Scrap
Indirect materials
Wages and salaries
Equipment depreciation
Total
< Required 2
15,000
9,300
32,200
93,800
77,500
103,000
$ 315,800
Required 4 >
20,000
9,900
34,500
111,000
73,000
103,000
$ 331,400
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