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Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors are happy with the system, the factory manager is not. A report for the company's Assembly Department for March follows: Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 25,000 $6,600 19,600 61,400 66,700 94,000 $ 248,300 Planning Budget 30,000 $ 7,200 21,000 70,500 64,000 94,000 $ 256,700 Variances $ 600 F 1,400 F 9,100 F 2,700 U 0 $ 8,400 F After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel 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 chronically failed to meet the sales goals expressed in the company's monthly budgets. Required: 1. The company's president is uneasy about the cost reports, identify 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?

Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors are happy with the system, the factory manager is not. A report for the company's Assembly Department for March follows: Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 25,000 $6,600 19,600 61,400 66,700 94,000 $ 248,300 Planning Budget 30,000 $ 7,200 21,000 70,500 64,000 94,000 $ 256,700 Variances $ 600 F 1,400 F 9,100 F 2,700 U 0 $ 8,400 F After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel 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 chronically failed to meet the sales goals expressed in the company's monthly budgets. Required: 1. The company's president is uneasy about the cost reports, identify 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?

Financial And Managerial Accounting
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter22: Budgeting
Section: Chapter Questions
Problem 3PB: Budgeted income statement and supporting budgets The budget director of Gold Medal Athletic Co.,...
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Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors are happy with the system, the factory manager is not. A report for the company's Assembly Department for March follows: Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 25,000 Required 1 $ 6,600 19,600 61,400 66,700 94,000 $ 248,300 Required 2 Required 3 Planning Budget 30,000 $ 7,200 21,000 70,500 64,000 94,000 $ 256,700 Required 4 After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel 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." Variances For the last several years, the company's marketing department chronically failed to meet the sales goals expressed in the company's monthly budgets. Complete this question by entering your answers in the tabs below. $600 F 1,400 F 9,100 F 2,700 U 0 $ 8,400 F Required: 1. The company's president is uneasy about the cost reports, identify 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? The company's president is uneasy about the cost reports, identify at least two reasons. Note: Select "X" if the item is one of the reasons. Cost reports are ineffective since budgeted costs at one level of activity are compared to actual costs at another level of activity. Cost reports show whether fixed costs are controlled and do not show whether variable costs are controlled. Cost reports are effective since budgeted costs at one level of activity are compared to actual costs at another level of activity. Cost reports show whether fixed costs and variable costs are controlled.
Transcribed Image Text:Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors are happy with the system, the factory manager is not. A report for the company's Assembly Department for March follows: Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 25,000 Required 1 $ 6,600 19,600 61,400 66,700 94,000 $ 248,300 Required 2 Required 3 Planning Budget 30,000 $ 7,200 21,000 70,500 64,000 94,000 $ 256,700 Required 4 After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel 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." Variances For the last several years, the company's marketing department chronically failed to meet the sales goals expressed in the company's monthly budgets. Complete this question by entering your answers in the tabs below. $600 F 1,400 F 9,100 F 2,700 U 0 $ 8,400 F Required: 1. The company's president is uneasy about the cost reports, identify 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? The company's president is uneasy about the cost reports, identify at least two reasons. Note: Select "X" if the item is one of the reasons. Cost reports are ineffective since budgeted costs at one level of activity are compared to actual costs at another level of activity. Cost reports show whether fixed costs are controlled and do not show whether variable costs are controlled. Cost reports are effective since budgeted costs at one level of activity are compared to actual costs at another level of activity. Cost reports show whether fixed costs and variable costs are controlled.
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