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 Planning Results Budget Variances Machine-hours Variable costs: Supplies 35,000 40,000 29,700 32,000 $2,300 F 19,500 20,000 51, 800 56,000 4,200 F 500 F Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost 800 F 79,200 80, 000 60,000 60.000 $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 can't understand why those people upstairs complain so much 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. The company's 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? Required 1Required 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 Cost reports show whether fixed costs and variable costs are controlled Required 1Required 2 Required 3 Required 4 What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? Flexible budget performance reports must be used Fixed budget performance reports must be used Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Actual Results Flexible Budget Planning Budget 35,000 40,000 Supplies Scrap Indirect materials Wages and salaries Equipment depreciation Total $ 29,700 19,500 51,800 79,200 60,000 $ 240,200 $ 32,000 0,000 56,000 80,000 60,000 $ 248,000 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 Planning Results Budget Variances Machine-hours Variable costs: Supplies 35,000 40,000 29,700 32,000 $2,300 F 19,500 20,000 51, 800 56,000 4,200 F 500 F Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost 800 F 79,200 80, 000 60,000 60.000 $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 can't understand why those people upstairs complain so much 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. The company's 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? Required 1Required 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 Cost reports show whether fixed costs and variable costs are controlled Required 1Required 2 Required 3 Required 4 What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? Flexible budget performance reports must be used Fixed budget performance reports must be used Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Actual Results Flexible Budget Planning Budget 35,000 40,000 Supplies Scrap Indirect materials Wages and salaries Equipment depreciation Total $ 29,700 19,500 51,800 79,200 60,000 $ 240,200 $ 32,000 0,000 56,000 80,000 60,000 $ 248,000