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	$ 9,900	$ 10,500	$ 600	F
Scrap	35,000	37,500	2,500	F
Indirect materials	101,000	120,000	19,000	F
Fixed costs:
Wages and salaries	79,900	75,000	4,900	U
Equipment depreciation	105,000	105,000	0
Total cost	$ 330,800	$ 348,000	$ 17,200	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?

Requirement 3:

	Actual Results	Revenue	Favorable/Unfavorable	Flexible Budget	Activity Variances	Favorable/Unfavorable	Planning Budget
Machine Hours	15000			15000			20000
Supplies	9900						10500
Scrap	35000						37500
Indirect Materials	101000						120000
Wages and Salaries	79900						75000
Equipment Depreciation	105000						105000
Total Cost	330800						348000