Frank Weston, supervisor of the Freemont Corporation\'s Machining Department, wa

Question

Frank Weston, supervisor of the Freemont Corporation's Machining Department, was visibly upset after being reprimanded for his department's poor performance over the prior month. The department's cost control report is given below: Freemont Corporation-Machining Department Cost Control Report For the Month Ended June 30 Actual Results 42,000 Planning Budget Variances Machine-hours 40,000 Supplies Maintenance Utilities Supervision Depreciation Total Direct labor wages $ 83,100 25,800 24,600 22,300 50,000 85,000 $ 290,800 $ 80,800 2,300 U 2,200 U 2,900 U 1,800U 23,600 21,700 20,500 50,000 85,000 $281,600 9,200U "I just can't understand all of these unfavorable variances," Weston complained to the supervisor of another department. “when the boss called me in, I thought he was going to give me a pat on the back because I know for a fact that my department worked more efficiently last month than it has ever worked before. Instead, he tore me apart. I thought for a minute that it might be over the supplies that were stolen out of our warehouse last month. But they only amounted to a couple of hundred dollars, and just look at this report. Everything is unfavorable." Direct labor wages and supplies are variable costs, supervision and depreciation are fixed costs; and maintenance and utilities are mixed costs. The fixed component of the budgeted maintenance cost is $15,700; the fixed component of the budgeted utilities cost is $13,700 Required: 2. Complete the performance report that will help Mr. Weston's superiors assess how well costs were controlled in the machining department. (Round your intermediate calculations to 2 decimal places. 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.) Freemont Corporation-Machining Department Flexible Budget Performance Report For the Month Ended June 30 Actual Results Flexible Budget Planning Budget Machine-hours 42,000 40,000 Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total $ 83,100 25,800 24,600 22,300 50,000 85,000 $ 290,800 $ 80,800 23,600 21,700 20,500 50,000 85,000 $ 281,600

Explanation / Answer

Actual Spending variances Flexible budget Activity variances Planning budget Machine hours 42000 42000 40000 Direct labor wages 83100 1740 F 84840 4040 U 80800 Supplies 25800 1020 U 24780 1180 U 23600 Maintenance 24600 2600 U 22000 300 U 21700 Utilities 22300 1460 U 20840 340 U 20500 Supervision 50000 0 None 50000 0 None 50000 Depreciation 85000 0 None 85000 0 None 85000 Total 290800 3340 U 287460 5860 U 281600

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