LO9-4, LO9-6 PROBLEM 9-26 Critiquing a Cost Report; Preparing a Performance Report L09-1, L09-2, L09-3 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 depart- ment's cost control report is given below: Freemont Corporation-Machining Department Cost Control Report For the Month Ended June 30 Actual Planning Results Budget Variances Machine-hours 38,000 35,000 Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total $ 86,100 23,100 137,300 15,700 38,000 80,000 $380,200 $ 80,500 21,000 134,000 15,200 38,000 80,000 $368,700 $ 5,600 U 2,100 U 3,300 U 500 U 0 0 $11,500 U just can't understand all of these unfavorable variances, Weston complained to the s another department. When the boss called me in, I thought he was going to giver back because I know for a fact that my department worked more efficiently last mo ver worked before. Instead, he tore me apart. I thought for a minute that it might be es that were stolen out of our warehouse last month. But they only amounted to a c d dollars, and just look at this report. Everything is unfavorable." rect labor wages and supplies are variable costs; supervision and depreciation and maintenance and utilities are mixed costs. The fixed component of the budgetec cost is $92,000; the fixed component of the budgeted utilities cost is $11,700. ed: aluate the company's cost control report and explain why the variances were all unt sing Exhibit 98 as your guide, prepare a performance report that will help Mr. periors assess how well costs were controlled in the Machining Department. For the Month Ended June 30 Actual Results Planning Budget Variances 38,000 35,000 Machine-hours Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total $ 86,100 23,100 137,300 15,700 38,000 80,000 $380,200 $ 80,500 21,000 134,000 15,200 38,000 80,000 $368,700 $ 5,600 U 2,100 U 3,300 U 500 U 0 0 $11,500 U "I just can't understand all of these unfavorable variances, Weston complained to the supervi- sor 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 mainte- nance cost is $92,000; the fixed component of the budgeted utilities cost is $11,700. Required: 1. Evaluate the company's cost control report and explain why the variances were all unfavorable. 2. Using Exhibit 98 as your guide, prepare a performance report that will help Mr. Weston's superiors assess how well costs were controlled in the Machining Department