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 Yor the Month Ended March 31 Actual Planning Results Budget 15,000 20,000 Variano Machine-hours 9,000$ 9,600 30,800 33,000 90,200 106,500 $ 600 T 2,200 P 16,300 F Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost 76,300 72,000 4,300 U 102,000 102,000 $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 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, identify at least two reasons. 2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? 3. Complete the new performance report for the quarter based on Flexible Budget Performance approach. 4. Were costs weil controlled in March? Complete this question by entering vour answers in the tabs below. prepare a new performance report for the quarter, (Do not round your intermediate calculations. Indicate the effect of e selecting for favorable, "U" for unfavorable, and "None" for no effect (1.e., zero variance), Input all amounts as positi Westmont Corporation Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Flexible Budget 15,000 Actual Results 15,000 Planning Budget 20,000 Machine-hours (9) Supplies Scrap 9,000 30,800 90,2001 76,300 102.000 308,300 9,600 33,000 106,500 72,000 Indirect materials Wages and salaries Equipment depreciation Total None 102.000 323,100 TipTop Filaht School offers flying lessons at a small municipal airport. The school's owner and manager has been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below: TipTop Flight School Variance Report For the Month Ended July 31 Actual Planning Results Budget 230 225 Lessons $ 66,350 $ 65,250 $1,100 E Revenue Expenses : Instructor wages Aircraft depreciation Puel Maintenance Ground facility expenses Administration Total expense Net operating income 14,830 14,625 205 U 8,050 7,875 175 U 5,200 4,500 700 U 4,7204,515 205 U 3.0253 .050 25 F 4,1754 ,255 BOE 40,000 38,820 1.180 U $ 26,350 $ 26,430 $ 80F After several months of using such variance reports, the owner has become frustrated. For example, she is quite confident that Instructor wages were very tightly controlled in July, but the report shows an unfavorable variance. The planning budget was developed using the following formulas, where is the number of lessons sold: Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Cost Formulas $2904 $659 $ 359 S206 S690 + $170 $2,150 + $49 53.580 + $ 3 Required: 2. Complete the flexible budget performance report for the school for July. (Indicate the effect of each va favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positi TipTop Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Results 230 Flexible Budget Planning Budget 225 Lessons $ 66,350 $ 65,250 Revenue Expenses: Instructor wages Aircraft depreciation $ 14,625 7,875 4,500 4,515 Fuel Maintenance Ground facility expenses Administration Total expense Net operating income 14,830 8,050 5,2001 4,720 3,025 4,175 40.000 26,350 3,050 4.255 38,820 26,430 $ $