Frank Weston, supervisor of the Freemont Corporation's Machining Department, was visibly upset after being reprimanded for his department's poor performance over the prior month. The department's cost control report is given below:

"I just can't understand all the red ink," Weston complained to the supervisor of another department. "When the boss called me in, I thought he was going to give me a pat on the back because I know for a fact that my department worked more efficiently last month than it has ever worked before. Instead, he tore me apart. I thought for a minute that it might be over the supplies that were stolen out of our warehouse last month. But they only amounted to a couple of hundred dollars, and just look at this report. Everything is unfavorable." Direct labor wages and supplies are variable costs; supervision and depreciation are fixed costs; and maintenance and utilities are mixed costs. The fixed component of the budgeted maintenance cost is $92,000; the fixed component of the budgeted utilities cost is $11,700. To Do:

1. Evaluate the companys cost control and explain why the variances were all Unfavorable.

2. Prepare a performance report that will help Mr. Weston's superiors assess how well costs were controlled in the Machining Department.

FREMONT CORPORATION Machining Department Cost Control Report For the Month Ended June 30 Planning Budget Actual Results Variances Machine-hours 35,000 38,000 Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total 5,600 U 2,100 U 3,300 U 500 U $ 80,500 86,100 $ 21,000 23,100 137,300 15,700 38,000 80,000 $ 368,700 380,200$11,500 U 134,000 15,200 38,000 80,000