Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system. A typical departmental cost report for a recent period follows: Assembly Department Cost Report For the Month Ended March 31 Actual Results Planning Budget Variances Machine-hours Variable costs: 55,000 60,000 Supplies Indirect materials Wages and salaries $ 39,800 42,000 $2,200 F 700 F 4,100 F 35,300 103,900 36,000 108,000 Fixed costs: 99,100 80,000 100,000 80,000 900 F Equipment depreciation Total cost $358,100 $366,000 $7,900 F After receiving a copy of this cost report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel really good to see how well things are going in my department. 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. Required: 1. The company's president is uneasy about the cost reports, what can be the reason (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) ?cost reports are ineffective since budgeted costs at one level of activity are compared to actual costs at another level of activity. 2 Cost reports show whether fixed costs are controlled and do not show whether variable costs are controlled ?cost reports are effective since budgeted costs at one level of activity are compared to actual costs at another level of activity. 2 Cost reports show whether fixed costs and variable costs are controlled 2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? Flexible budget performance reports must be used Fixed budget performance reports must be used