FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Frank Weston, supervisor of the Freemont Corporation's Machining Department, was visibly upset after being reprimanded for his
department's poor performance over the prior month. The department's cost control report is given below:
Freemont Corporation-Machining Department
Cost Control Report
For the Month Ended June 30
Machine-hours
Direct labor wages
Supplies
Maintenance
Utilities
Supervision
Depreciation
Total
Actual
Results
38,000
$ 86,100
Planning
Budget
35,000
$ 80,500
21,000
134,000
Variances
$ 5,600 U
2,100 U
3,300 U
500 U
23, 100
137,300
15,700
38,000
80,000
$ 380,200 $ 368,700 $ 11,500 U
15,200
38,000
80,000
0
0
"I just can't understand all of these unfavorable variances," Weston complained to the supervisor of another department. "When the
boss called me in, I thought he was going to give me a pat on the back because I know for a fact that my department worked more
efficiently last month than it has ever worked before. Instead, he tore me apart. I thought for a minute that it might be over the supplies
that were stolen out of our warehouse last month. But they only amounted to a couple of hundred dollars, and just look at this report.
Everything is unfavorable."
Direct labor wages and supplies are variable costs; supervision and depreciation are fixed costs; and maintenance and utilities are
mixed costs. The fixed component of the budgeted maintenance cost is $92,000; the fixed component of the budgeted utilities cost is
$11,700.
Required:
2. Complete the performance report that will help Mr. Weston's superiors assess how well costs were controlled in the machining
department. (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.)
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