Several years ago, Westmont Corporation developed a comprehensive budgeting syst

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 Results Budget Variances Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost 35,000 40, 000 $ 29,700 32,000 $2,300 F 500 F 19,500 20,000 51,800 56, 000 4,200 F 800 F 79,200 80,000 60,000 60,000 $240,200 $248,000 $7,800 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 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. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Westmont Corporation Assembly Department Flexible Budget Performance Report For the Month Ended March 31 Actual Revenue and SpendingFlexible Variances Planning Budget Activity Variances Results Budget Machine-hours 35,000 40,000 Supplies Scrap Indirect materials Wages and salaries Equipment depreciation Total $ 29,700 19,500 51,800 79,200 60,000 $ 240,200 $ 32,000 20,000 56,000 80,000 60,000 $ 248,000 0 None one 0 None

Explanation / Answer

Flexible budget performance report :

Actual results Revenue and spending variance Flexible budget Activity variance Planning budget Machine hour 35000 35000 40000 Supplies 29700 1700 U 28000 4000 F 32000 Scrap 19500 2000 U 17500 2500 F 20000 Indirect materials 51800 2800 U 49000 7000 F 56000 Wages and salaries 79200 800 F 80000 0 None 80000 Equipment depreciation 60000 0 None 60000 0 None 60000 Total 240200 5700 U 234500 13500 F 248000

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