Answered: Machine-hours (q) Supplies Scrap…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 3P: Budgeted selling and administrative expenses for King Tire Co. In P7-2 for the year ended December...

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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: 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: The company's president is uneasy about the cost reports, identify at least two reasons. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? Complete the new performance report for the quarter, based on Flexible Budget Performance approach. Were costs well controlled in March?"None" for no effect (i.e., zero variance). Input all amounts as positive values. \table[[Westmont Corporation],[Assembly Department],[Flexible Budget Performance Report],[For the Month Ended March 31],[,\table[[Actual],[Results]],\table[[Revenue and Spending],[Variances]],\table[[Flexible],[Budget]],Activity Variances,,\table[[nning],[Idget]]],[Machine-hours (q),25,000,,,,,30,000],[Supplies,6,300,,,,$,6,900],[Scrap,18,200,,,,,19,500],[Indirect materials,57,800,,,,,66,000],[Wages and salaries,65,500,,,,,63,000],[Equipment depreciation,93,000,,,,,93,000],[Total,$240,800,,,,$,248,400]]

"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 Spending
Results
Variances
Machine-hours (q)
25,000
Supplies
$
6,300
Scrap
18,200
Indirect materials
57,800
Wages and salaries
65,500
Equipment depreciation
93,000
Total
$ 240,800
Flexible
Planning
Activity Variances
Budget
Budget
30,000
$
6,900
19,500
66,000
63,000
93,000
$ 248,400

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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