Question

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: See bottom of question

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.

Complete the new performance report for the quarter, based on Flexible Budget Performance approach.

Assembly Department Cost Report For the Month Ended March 31 Actual Planning Results Budget 25,000 30,000 Variances Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost $ 7,500 $ 8,100 $ 600 F 1,700 F 84,000 11,800 F 23,800 25,500 72,200 70,300 97,000 67,000 97,000 3,300 U $270,800 $281,600 $10,800 F

Answer 1

WESTMONT C ation Flexible Budget Performance Report For the Month Ended Mar-31 Per Results Spending Variances Flexible Budget Activity Variances Budget Machine Hours 25000 Favourable Unfavourable 25000 Favourable Unfavourable Fixed Variable Machine Hours $25,000 25000 $30,000 Less 0.27 0.85 2.80 1,350 4,250 14,000 67 23 72 70,3 97 750 2,550 2,200 3,300 8,100 25,500 84,000 67,000 97,000 Scra 2125 Indirect Material ages And Salaries Depreciation Total Expenses 67000+ 97000+ 67 $0 19,600 281 Step -01 Supplies Per Oty Actual result Gi Wages And p-04 Salaries Fixed Per Month Given Flexible Budge 8100/30000 Per Qty Actual result 0.27 x 25000.00 Flexible Fixed Per Month Planning B Per Qty x Qty 0.00x #REF! 0.27 x 30000.00 Planning Budget Fixed 8100 Per Month #REF! Step -02 Scrap Per Qty

#REF! Step -02 Scrap Per Qty 67000 oty Given Step-05 Depreciation $97,000.00 PM Fixed I result xible Budge 25500/8100 Per Qty Given 97 0.85 x 25000.00 Flexible Budg Planning Budget Per Qty x Qty 0.85 x 30000.00 Planning Budget 25500 Step -03 Indirect Material Per Qty per month 97000 ual Given xible Budge 84000/8100 Per Qty x Qty 2.80x25000.00 Planning Budget Per Qty 2.8 x 30000.00 84000