A report for a company's Assembly Department for the month of March follows. The operating manager in charge is not satisfied with the information generated by the system. On the other hand, department supervisors are satisfied. For this cost report, the company measures its activity in terms of machine hours. Assembly Department Cost Report For the Month Ended March 31 Actual Planning Results Budget 15,000 20,000 Variances Machine-hours $ 9,600 $ 10,200 $ 600 F 33,600 36,000 2,400 F 97,400 115,500 18,100 F Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost 78,700 74,000 4,700 U 104,000 104,000 $ 323,300 $339, 700 $16,400 F The company has failed to meet the sales goals stated in the company's monthly budgets for the last several years. Required: 1. Identify at least two reasons why the operating manager is not comfortable with the report. 2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? 3. Using a Flexible Budget Performance approach, complete the new performance report for the period ending March 31. 4. Were costs well controlled in March? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 The company's president is uneasy about the cost reports, identify at least two reasons. (Select "X" if the item is one of the reasons.) Cost reports are ineffective since budgeted costs at one level of activity are compared to actual costs at another level of activity. Cost reports show whether fixed costs are controlled and do not show whether variable costs are controlled. Cost reports are effective since budgeted costs at one level of activity are compared to actual costs at another level of activity. Cost reports show whether fixed costs and variable costs are controlled. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? OFlexible budget performance reports must be used OFixed budget performance reports must be used Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 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.) Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Flexible Budget Actual Results 15,000 Planning Budget 20,000 Machine-hours (9) $ 9,600 33,600 Supplies Scrap Indirect materials Wages and salaries Equipment depreciation Total 97,400 78,700 104,000 $ 323,300 $ 10,200 36,000 115,500 74,000 104,000 $ 339,700 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Were costs well controlled in March? Costs were well controlled Costs were not well controlled
