Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors are happy with the system, the factory manager is not. A report for the company's Assembly Department for March follows: Assembly Department Cost Report For the Month Ended March 31 Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost Actual Results 25,000 Planning Budget Variances 30,000 $ 5,700 $ 6,300 $ 600 F 15,400 16,500 1,100 F 50,600 57,000 6,400 F 63,100 61,000 2,100 U 91,000 91,000 0 $ 225,800 $ 231,800 $ 6,000 F After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel 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 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?
Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors are happy with the system, the factory manager is not. A report for the company's Assembly Department for March follows: Assembly Department Cost Report For the Month Ended March 31 Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost Actual Results 25,000 Planning Budget Variances 30,000 $ 5,700 $ 6,300 $ 600 F 15,400 16,500 1,100 F 50,600 57,000 6,400 F 63,100 61,000 2,100 U 91,000 91,000 0 $ 225,800 $ 231,800 $ 6,000 F After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel 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 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors
are happy with the system, the factory manager is not.
A report for the company's Assembly Department for March follows:
Assembly Department
Cost Report
For the Month Ended March 31
Machine-hours
Variable costs:
Supplies
Scrap
Indirect materials
Fixed costs:
Wages and salaries
Equipment depreciation
Total cost
Actual
Results
25,000
Planning
Budget
Variances
30,000
$ 5,700
$ 6,300
$ 600 F
15,400
16,500
1,100 F
50,600
57,000
6,400 F
63,100
61,000
2,100 U
91,000
91,000
0
$ 225,800
$ 231,800
$ 6,000 F
After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel 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 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?
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