Question

Problem 9-26 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 Results 42,000 Planning Budget Variances Machine-hours 40,000 Direct labor wages Supplies Maintenance Utilities Supervision Depreciation $ 93,500 29,800 25,900 23,600 58,000 101,000 ş 331,800 $ 90,400 26,800 23,300 22,100 58,000 101,000 3,100 U 3,000 U 2,600U 1,500 U Total $321,600 $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. 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

	Actual results	Revenue and spending variance	Flexible budget	Activity variance	Planning budget
Machine hour	42000		42000		40000
Direct labor wages	93500	1420 F	94920	4520 U	90400
Supplies	29800	1660 U	28140	1340 U	26800
Maintenance	25900	2380 U	23520	220 U	23300
Utilities	23600	1120 U	22480	380 U	22100
Supervision	58000	0 None	58000	0 None	58000
Depreciation	101000	0 None	101000	0 None	101000
Total	331800	3740 U	328060	6460 U	321600