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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

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

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