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 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 $ 225,800 $ 231,800 $ 6,000 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 can't understand why those people upstairs complain so much about the reports." For the last several years, the company's marketing department has chronically failed to meet the sales goals expressed in the company's monthly budgets. Required: 1. Complete the new performance report for the quarter, based on Flexible Budget Performance approach. 2. Were costs well controlled in March? Complete this question by entering your answers in the tabs below. Required 3. Required 4 Complete the new performance report for the quarter, based on Flexible Budget Performance approach. Note: 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 Machine-hours (q) 25,000 Supplies $ 5,700 2 Scrap 15,400 2 Indirect materials 50,600 U Wages and salaries 63,100 บ Equipment depreciation 91,000 None Total $ 225,800 U Flexible Budget Planning Budget 30,000 F $ 6,300 F 16,500 F 57,000 None 61,000 None 91,000 $ 231,800
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 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 $ 225,800 $ 231,800 $ 6,000 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 can't understand why those people upstairs complain so much about the reports." For the last several years, the company's marketing department has chronically failed to meet the sales goals expressed in the company's monthly budgets. Required: 1. Complete the new performance report for the quarter, based on Flexible Budget Performance approach. 2. Were costs well controlled in March? Complete this question by entering your answers in the tabs below. Required 3. Required 4 Complete the new performance report for the quarter, based on Flexible Budget Performance approach. Note: 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 Machine-hours (q) 25,000 Supplies $ 5,700 2 Scrap 15,400 2 Indirect materials 50,600 U Wages and salaries 63,100 บ Equipment depreciation 91,000 None Total $ 225,800 U Flexible Budget Planning Budget 30,000 F $ 6,300 F 16,500 F 57,000 None 61,000 None 91,000 $ 231,800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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