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Critiquing a Cost Report Complete the following exercise: 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: "I just can't understand all the red ink," 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 $92,000; the fixed component of the budgeted utilities cost is $11,700. Freemont Corporation-Machining Department Cost Control Report For the Month Ended June 30

Machine-hours Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total

Planning Actual Budget Results 35,000 38,000 $80,500 21,000 134,000 15,200 38,000 80,000 $368,700

Varian ces

$86,100 $5,600U 23,100 2,100U 137,300 3,300U 15,700 500U 38,000 80,000 $380,200

• Evaluate the company's cost control report and explain why the variances were all unfavorable. • Prepare a performance report that will help Mr. Weston's superiors assess how well costs were controlled in the Machining Department. Respond to at least two of your fellow students’ postings.

Bus 630 week 4 dq 2 critiquing a cost report  

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