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 | 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 costs: | |||||||
Wages and salaries | 79,200 | 80,000 | 800 | F | |||
Equipment depreciation | 60,000 | 60,000 | |||||
Total cost | $ | 240,200 | $ | 248,000 | $ | 7,800 | 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 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 budget
Required:
Complete the new performance report for the quarter, based on Flexible Budget Performance approach.
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