Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. Whi departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with 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 Planning Results Budget 25,000 30,000 Variances Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost $ 6,900 21,000 65,000 $ 7,500 22,500 75,000 $ 600 F 1,500 F 10,000 F 67,900 95,000 $ 255,800 65,000 95,000 $ 265,000 2,900 U 0 $ 9,200 F After receiving a copy of this cost report, the supervisor of the Assembly Department stated, These reports are super. It makes m feel really good to see how well things are going in my department. I can't understand why those people upstairs complain so mu 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 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 kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? O Flexible budget performance reports must be used Fixed budget performance reports must be used Westmont Corporation Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Actual Results Flexible Budget 25,000 $ 6,900 21,000 Machine-hours (9) Supplies Scrap Indirect materials Wages and salaries Equipment depreciation Planning Budget 30,000 $ 7,500 22,500 75,000 65,000 95,000 $ 265,000 65,000 67,900 95,000 $ 255,800 Total