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 report for the company's Assembly Department for the month of March follows:

Assembly Department Cost Report For the Month Ended March 31
	Actual Results		Planning Budget		Variances
Machine-hours		15,000		20,000
Variable costs:
Supplies	$	9,000	$	9,600	$	600	F
Scrap		30,800		33,000		2,200	F
Indirect materials		90,200		106,500		16,300	F
Fixed costs:
Wages and salaries		76,300		72,000		4,300	U
Equipment depreciation		102,000		102,000
Total cost	$	308,300	$	323,100	$	14,800	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. I cant understand why those people upstairs complain so much about the reports.

For the last several years, the companys marketing department has chronically failed to meet the sales goals expressed in the companys monthly budgets.

Required:

1. The companys president is uneasy about the cost reports, identify at least two reasons.

3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach.