Please help me answer this question Several years ago. Westmont Corporation deve

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Please help me answer this 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 typical departmental cost report for a recent period follows: 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. The company's president is uneasy about the cost reports, what can be the reason? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) 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 atone level of activity are compared to actual costs at another level of activity. Cost reports show whether fixed costs and variable costs are controlled. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? Flexible budget performance reports must be used Fixed budget performance reports must be used Complete the new performance report for the quarter, based on Flexible Budget Performance approach. (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.)

Explanation / Answer

1. Reson is A & B.

2. Flexible budget report should be used.

3.

Planning Actual Result Flexible Spending   Activity   Budget Budget Budget Variance Variance Machine Hours                    40,000              35,000      35,000 Actual-Flexible Planning-Flexible Variable Cost Scrap                    20,000              19,500      17,500       (2,000) U                        2,500 F Indirect Material                    56,000              51,800      49,000       (2,800) U                        7,000 F Supplies                      32,000              29,700      28,000       (1,700) U                        4,000 F Fixed Cost Wages and Salaries                    80,000              79,200      80,000            800 F                              -   Equipment Depriciation                    60,000              60,000      60,000               -                                -   Total Cost                 248,000            240,200    234,500       (5,700) U                     13,500 F

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