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: Assembly Department Cost Report For the Month Ended March 31 Actual Planning Budget Results Variances Machine-hours 15,000 20,000 Variable costs: Supplies Зeкар Indirect materials $ 10.200 $ 10,e00 39,000 124, 500 600 F 36, 400 2,600 r 104,600 19,900 F Fixed costs: Wages and salaries Equipment depreciation 76,000 106,000 81,100 5,100 U 106,000 Total cost $338,300 $a56, 300 $18,000 F 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 upstalrs complain so much about the reports. For the last several years, the company's marketing department has chronically falled to meet the sales goals expressed in the company's monthly budgets Required: 1. The company's president is uneasy about the cost reports. ldentify 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?