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 | 15,000 | 20,000 | |||||
Variable costs: | |||||||
Supplies | $ | 10,500 | $ | 11,100 | $ | 600 | F |
Scrap | 37,800 | 40,500 | 2,700 | F | |||
Indirect materials | 108,200 | 129,000 | 20,800 | F | |||
Fixed costs: | |||||||
Wages and salaries | 82,300 | 77,000 | 5,300 | U | |||
Equipment depreciation | 107,000 | 107,000 | |||||
Total cost | $ | 345,800 | $ | 364,600 | $ | 18,800 | 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 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?
The companys president is uneasy about the cost reports, identify at least two reasons. (Select "X" if the item is one of the reasons.)
|
-
What changes, if any, should be made in the reports to give better insight into how well departmental supervisors are controlling costs?
Flexible budget performance reports must be usedradio button unchecked1 of 2 Fixed budget performance reports must be usedradio button unchecked
-
prepare a new performance report for the quarter, (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.)
Westmont Corporation Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Actual Results Flexible Budget Planning Budget Machine-hours (q) 15,000 20,000 Supplies $10,500 $11,100 Scrap 37,800 40,500 Indirect materials 108,200 129,000 Wages and salaries 82,300 77,000 Equipment depreciation 107,000 107,000 Total $345,800 $364,600 -
How well were costs controlled in the Assembly Department in March?
Costs were well controlledradio button unchecked1 of 2 Costs were not well controlledradio button unchecked2 of 2
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started