Final answer:
Cost control involves managing both variable and fixed costs. For the Freemont Corporation's Machining Department, unfavorable variances in variable costs need investigation, despite potential efficiency gains from increased machine use. Total costs are best understood by evaluating both fixed and variable components, as illustrated by the example of 'The Clip Joint' barber shop.
Step-by-step explanation:
When assessing Mr. Weston's cost control performance, we need to consider both variable and fixed costs as part of the total costs for the Freemont Corporation's Machining Department. Since direct labor wages and supplies are variable costs, they will change in proportion to the level of production activity or volume, such as machine-hours. Fixed costs, like supervision and depreciation, remain constant regardless of the production volume. However, maintenance and utilities are mixed costs comprising both variable and fixed components.
According to the provided report, Mr. Weston should investigate the reasons behind the unfavorable variances in variable costs, which could include factors like increased wages or unexpected increases in supplies' prices. Even though the overtime work might have resulted in increased efficiency, the financial impact of higher costs needs to be addressed. It's also important to analyze the theft of supplies and consider any other inefficiencies or changes that might have occurred during the last month.
Total costs can be analyzed using an example such as 'The Clip Joint' barber shop, where the fixed costs are $160 per day, and variable costs are $80 per barber per day. This illustrates how total costs are calculated by combining both types of costs, highlighting the importance of managing each for overall cost control.