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Item4

Item 4 4 points

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	$	9,600	$	10,200	$	600	F
Scrap		33,600		36,000		2,400	F
Indirect materials		97,400		115,500		18,100	F
Fixed costs:
Wages and salaries		78,700		74,000		4,700	U
Equipment depreciation		104,000		104,000
Total cost	$	323,300	$	339,700	$	16,400	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?

Required 1 Required 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 activity. Cost reports show whether fixed costs and variable costs are controlled Required 1 Required 2 Required 3 Required 4 prepare a new performance report for the quarter, (Do not round your intermediate calcu lations. 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 Planning Budget Actual Flexible Results Budget Machine-hours (g) 20,000 15,000 $ Supplies 9,600 10,200 Scrap 33,600 36,000 Indirect materials 97,400 115,500 Wages and salaries 78,700 74,000 Equipment depreciation 104,000 104.000 339,700 Total 323.300