Question
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
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 | $ | 8,700 | $ | 9,300 | $ | 600 | F |
Scrap | 29,400 | 31,500 | 2,100 | F | |||
Indirect materials | 86,600 | 102,000 | 15,400 | F | |||
Fixed costs: | |||||||
Wages and salaries | 75,100 | 71,000 | 4,100 | U | |||
Equipment depreciation | 101,000 | 101,000 | |||||
Total cost | $ | 300,800 | $ | 314,800 | $ | 14,000 | 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?
The companys president is uneasy about the cost reports, identify at least two reasons. (Select "X" if the item is one of the reasons.)
|
What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs?
|
Complete the new performance report for the quarter, based on Flexible Budget Performance approach. (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.)
|
Were costs well controlled in March?
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started