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	$	7,800	$	8,400	$	600	F
Scrap		25,200		27,000		1,800	F
Indirect materials		75,800		88,500		12,700	F
Fixed costs:
Wages and salaries		71,500		68,000		3,500	U
Equipment depreciation		98,000		98,000
Total cost	$	278,300	$	289,900	$	11,600	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?

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 Flexible Budget Actual Results 25,000 Planning Budget 30,000 Machine-hours (9) $ 7,800 Supplies Scrap Indirect materials Wages and salaries Equipment depreciation 25,200 75,800 71,500 98,000 $ 278,300 $ 8,400 27,000 88,500 68,000 98,000 $ 289,900 Total