Question

Problem 9-26 (Algo) Critiquing a Cost Report; Preparing a Performance Report [LO9-1, LO9-2, LO9-3, LO9-4, LO9-6] 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-hours 42,000 40,000 $ 88,300 Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total $ 85,600 25, 200 22,500 21,300 54,800 93, eee $381,680 $2,700 U 2,600 U 2,200 U 1,100 u 27,800 24,700 22,400 54,000 93,280 $ 310, 200 $8,600 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. 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."

Answer 1

Flexible budget performance report

For the month ended June 30

	Actual results	Spending variance	Flexible budget	Activity variance	Planning budget
Machine hour	42000		42000		40000
Direct labor wages	88300	1580 F	89880	4280 U	85600
Supplies	27800	1340 U	26460	1260 U	25200
Maintenance	24700	1940 U	22760	260 U	22500
Utilities	22400	740 U	21660	360 U	21300
Supervision	54000	0 None	54000	0 None	54000
Depreciation	93000	0 None	93000	0 None	93000
Total	310200	2440 U	307760	6160 U	301600