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 consierable dissatistfaction with the information being generate by the system. A report for the company's Assembly Department for the month of March follows:

Assembly Department

Cost Reports

For the Month Ended March 31

Actual Results Planning Budget Variances

Machine-Hours 35,000 40,000

Variable Costs:

Supplies $29,700 $32,000 $2,300 F

Scrap 19,500 20,000 500 F

Indirect Materials 51,800 56,000 4,200 F

Fixed Cost:

Wages and salaries 79,200 80,000 800 F

Equipment depreciation 60,000 60,000 -

Total Cost $240,200 $248,00 $7,800 F

After recieving a copy of this cost report, the supervisor of the Assembly Department stated, "These reports are super. It makes me 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 and would like you to evaulate their usefulness to the company.

2. What changes, if any, should be made in the reports to give better insights into how well departmental supervisors are controlling costs?

3. Prepare a new performance reports for the quarter, incorporating any changes you suggested in question (2) above.

4. How well were costs controlled in the Assembly Department in March?