Question

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 Actual Planning Results Budget Variances Machine- 42,000 40,000 hours Direct labors 93,500 wages Supplies 29,800 Maintenance 25,900 Utilities 23,600 Supervision 58,000 Depreciation 101.000 Total $331,800 $90,400 26,800 23,300 22,100 58,000 101,000 $321, 600 $ 3,100 U 3,000 U 2,600 U 1,500 U $10,200 U "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 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 foxed component of the budgeted maintenance cost is $18,900, the fixed component of the budgeted utilities cost is $14,500 Required: 2. Complete the performance report that will help Mr. Weston's superiors assess how well costs were controlled in the machining department. (Round your intermediate calculations to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Input all amounts as positive values.) Answer is complete but not entirely correct. Freemont Corporation Machining Department Flexible Budget Performance Report For the Month Ended June 30 Actual Activity Planning Results Variances Variances Budget 42,000 42,000 40,000 Revenue and Spending Flexible Budget Machine-hours 4520Blu 26.800 Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total $ 93,500 4.420 F $ 94,920 5 os 90,400 29.800 1.660JU 2 8,140 (1.340U | 25.900 1431XU 2 4,46 |(1,165 ju l 23,300 23,600395 XU 23,205 (1.105 XUL 22.100 5 8,000 None58,000 None 58,000 101.000 None 101,000 None 101.000 331.800 $2.073 U 329.73.18.1303U 321,600 Prey

Answer 1

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	Budget	Less: Fixed	=Variable	MH	Per unit
Maintenance Cost	$       23,300	$           18,900	$                         4,400	40,000	$                           0.11
Utility Cost	$       22,100	$           14,500	$                         7,600	40,000	$                           0.19
		Acutal	Revenue and Spending Variance		Flexible Budget	Activity Variance		Planning Budget
Machiner Hours		42,000			42,000			40,000
Direct Labor wages		$           93,500	$                         1,420	F	$                       94,920	$                         4,520	U	$                         90,400
Supplies		$           29,800	$                         1,660	U	$                       28,140	$                         1,340	U	$                         26,800
Maintanence ($18,900+$0.11q)		$           25,900	$                         2,380	U	$                       23,520	$                             220	U	$                         23,300
Utilities ($14,500+$0.19q)		$           23,600	$                         1,120	U	$                       22,480	$                             380	U	$                         22,100
Supervision		$           58,000	$                                -	None	$                       58,000	$                                -	None	$                         58,000
Depreciation		$         101,000	$                                -	None	$                    101,000	$                                -	None	$                      101,000
Total		$         331,800	$                         3,740	U	$                    328,060	$                         6,460	U	$                      321,600