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everal 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: Machine-hours Variable costs: Supplies Scrap Indirect materials. Fixed costs: Wages and salaries. Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 15,000 $ 9,900 35,000 101,000 79,900 105,000 $ 330,800 Planning Budget 20,000 $ 10,500 37,500 120,000 Variances $600 F 2,500 F 19,000 F 75,000 105,000 $ 348,000 $ 17,200 F 4,900 U 0 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. 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?

everal 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: Machine-hours Variable costs: Supplies Scrap Indirect materials. Fixed costs: Wages and salaries. Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 15,000 $ 9,900 35,000 101,000 79,900 105,000 $ 330,800 Planning Budget 20,000 $ 10,500 37,500 120,000 Variances $600 F 2,500 F 19,000 F 75,000 105,000 $ 348,000 $ 17,200 F 4,900 U 0 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. 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?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 15E: Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing...
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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: Machine-hours Variable costs: Supplies Scrap Indirect materials. Fixed costs: Wages and salaries. Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 15,000 Required 1 Required 2 Required 3 $ 9,900 35,000 101,000 Machine-hours (q) Supplies Scrap Indirect materials Wages and salaries Equipment depreciation Total 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. Actual Results Planning Budget 20,000 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? 15,000 9,900 35,000 101,000 79,900 105,000 $330,800 $ 10,500 37,500 120,000 3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach. 4. Were costs well controlled in March? $ 79,900 75,000 105,000 4,900 U 0 105,000 $ 330,800 $ 348,000 $ 17,200 F Complete this question by entering your answers in the tabs below. Variances $ 600 F 2,500 F 19,000 F 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. U U U U None U Westmont Corporation Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Revenue and Spending Flexible Variances Budget 15,000 < Required 2 Activity Variances Required 4 > F F F None None F Planning Budget 20,000 10,500 37,500 120,000 75,000 105,000 $ 348,000
Transcribed Image Text: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: Machine-hours Variable costs: Supplies Scrap Indirect materials. Fixed costs: Wages and salaries. Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 15,000 Required 1 Required 2 Required 3 $ 9,900 35,000 101,000 Machine-hours (q) Supplies Scrap Indirect materials Wages and salaries Equipment depreciation Total 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. Actual Results Planning Budget 20,000 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? 15,000 9,900 35,000 101,000 79,900 105,000 $330,800 $ 10,500 37,500 120,000 3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach. 4. Were costs well controlled in March? $ 79,900 75,000 105,000 4,900 U 0 105,000 $ 330,800 $ 348,000 $ 17,200 F Complete this question by entering your answers in the tabs below. Variances $ 600 F 2,500 F 19,000 F 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. U U U U None U Westmont Corporation Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Revenue and Spending Flexible Variances Budget 15,000 < Required 2 Activity Variances Required 4 > F F F None None F Planning Budget 20,000 10,500 37,500 120,000 75,000 105,000 $ 348,000
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