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	$ 5,700	$ 6,300	$ 600	F
Scrap	15,400	16,500	1,100	F
Indirect materials	50,600	57,000	6,400	F
Fixed costs:
Wages and salaries	63,100	61,000	2,100	U
Equipment depreciation	91,000	91,000	0
Total cost	$ 225,800	$ 231,800	$ 6,000	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. Complete the new performance report for the quarter, based on Flexible Budget Performance approach.

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. 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.) Machine-hours (9) Westmont Corporation Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Actual Flexible Results Budget 25,000 $ 5,700 15,400 50,600 63,100 91,000 $ 225,800 Planning Budget 30,000 $ 6,300 16,500 57,000 Supplies Scrap Indirect materials Wages and salaries Equipment depreciation Total 61,000 91,000 $ 231,800