A report for Easterly Corporation's production department for the month of May follows:

Production Department Cost Report For the Month Ended May 31
	Actual Results		Planning Budget		Variances
Machine-hours		15,000		20,000
Variable costs:
Supplies	$	10,800	$	11,400	$	600	F
Scrap		39,200		42,000		2,800	F
Indirect materials		111,800		133,500		21,700	F
Fixed costs:
Wages and salaries		83,500		78,000		5,500	U
Equipment depreciation		108,000		108,000
Total cost	$	353,300	$	372,900	$	19,600	F

After receiving a copy of this cost report, the supervisor of the Production Department stated, These reports are super. It makes me feel really good to see how well things are going in my department. I cant understand why those people upstairs complain so much about the reports.

For the last several years, the companys marketing department has chronically failed to meet the sales goals expressed in the companys monthly budgets.

Required:

The companys president is uneasy about the cost reports, identify at least two reasons.

What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs?

Complete the new performance report for the month of May, based on Flexible Budget Performance approach.

Were costs well controlled in May?