After receiving a copy of the following cost report, the supervisor of the Assembly Department stated,

"These reports are super. It makes me feel 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.

Assembly Department

Cost Report

For the Month Ended March 31

Static

Planning

Actual

Favorable

Budget

Results

Variances

Unfavorable

Machine hours

40,000

35,000

Variable Costs:

Supplies

$32,000

$29,700

$2,300

F

Scrap

20,000

19,500

500

F

Indirect Materials

56,000

51,800

4,200

F

Fixed Costs:

Wages & Salaries

80,000

79,200

800

F

Equipment Depreciation

60,000

60,000

-

Total Cost

$248,000

$240,200

$7,800

Required:

1. The company's president is uneasy about the cost reports and would like you to evaluate their

usefulness to the company. Are the reports useful? List your reasons as to why or why not.

2. What changes, if any, should be made in the reports to give a better insight into how well

department supervisors are controlling costs?

3. Prepare a new performance report for the quarter, incorporating any changes you suggested in

question 2 above.

4. How well were costs controlled in the Assembly Department in March?

data for part 3

	Static Planning	Activity variance	F U	Flexible budget	Spending variance	F U	Actual results
MAchine hours
Supplies
Scrap
Indirect Materials
Wages and salaries
Equipment Depreciation
Total	0	0		0	0		0

Fill in