PROBLEM 9-23 Critiquing a Cost Report; Preparing a Performance Report LO9-1, LO9-2, LO9-3, LO9-4 after being reprimanded for his department's poor performance over the prior month. The depart- Frank Weston, supervisor of the Freemont Corporation's Machining Department, was visibly upset 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 $11,500 USD "I just can't understand all of these unfavorable variances, 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 effi- ciently 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 9-8 as your guide, prepare a performance report that will help Mr. Weston's superiors assess how well costs were controlled in the Machining Department