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		25,000		30,000
Variable costs:
Supplies	$	7,200	$	7,800	$	600	F
Scrap		22,400		24,000		1,600	F
Indirect materials		68,600		79,500		10,900	F
Fixed costs:
Wages and salaries		69,100		66,000		3,100	U
Equipment depreciation		96,000		96,000
Total cost	$	263,300	$	273,300	$	10,000	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.

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 well controlled in March?

Required 1 Required 2 Required 3 Required 4 The company's president is uneasy about the cost reports, identify at least two reasons. (Select "X" if the item is one of the reasons.) Cost reports are ineffective since budgeted costs at one level of activity are compared to actual costs at another level of activity. 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. Cost reports show whether fixed costs and variable costs are controlled. Required 1 Required 2 Required 3 Required 4 What changes, if any, should be made in the reports 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 Required 1 Required 2 Required 3 Required 4 prepare a new performance report for the quarter, (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Westmont Corporation Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Flexible Budget Actual Results Planning Budget 30,000 Machine-hours (9) 25,000 $ 7,800 Supplies Scrap Indirect materials $ 7,200 22,400 68,600 69,100 96,000 $ 263,300 Wages and salaries 24,000 79,500 66,000 96,000 $ 273,300 Equipment depreciation Total Required 1 Required 2 Required 3 Required 4 How well were costs controlled in the Assembly Department in March? O Costs were well controlled Costs were not well controlled