Question

In: Accounting

Amarillo Corporation has four divisions: the assembly division, the processing division, the machining division, and the...

Amarillo Corporation has four divisions: the assembly division, the processing division, the machining division, and the packing division. All four divisions are under the control of the vice president of manufacturing. Each division has a manager and several departments that are directed by supervisors. The chain of command runs downward from vice president to division manager to supervisor. The processing division is composed of the paint and finishing departments. The May responsibility reports for the supervisors of these departments follow.

Budgeted* Actual Variance
Paint Department
Controllable costs
Raw materials $ 84,000 $ 86,000 $ 2,000 U
Labor 115,400 128,000 12,600 U
Repairs 9,600 7,740 1,860 F
Maintenance 5,200 4,920 280 F
Total $ 214,200 $ 226,660 $ 12,460 U
Finishing Department
Controllable costs
Raw materials $ 60,000 $ 58,000 $ 2,000 F
Labor 86,600 79,800 6,800 F
Repairs 5,660 6,340 680 U
Maintenance 3,360 4,100 740 U
Total $ 155,620 $ 148,240 $ 7,380 F

*Amarillo uses flexible budgets for performance evaluation.

Other pertinent cost data for May follow.

Budgeted* Actual
Cost data of other divisions
Assembly $ 760,000 $ 748,600
Machining 580,000 592,800
Packing 829,900 811,400
Other costs associated with
Processing division manager 440,000 435,600
Vice president of manufacturing 256,000 266,120

*Amarillo uses flexible budgets for performance evaluation.

Required

  1. Prepare a responsibility report for the manager of the processing division.

  2. Prepare a responsibility report for the vice president of manufacturing

  3. Responsibility Report
    Vice President of Manufacturing
    For the Month Ended May 31
    Controllable costs Budget Actual Variances
    Assembly division Fselected answer correct
    Processing division Uselected answer correct
    Machining division 580,000selected answer correct 592,800selected answer correct 12,800selected answer correct Uselected answer correct
    Packing division 829,900selected answer correct 811,400selected answer correct 18,500selected answer correct Fselected answer correct
    Other costs 256,000selected answer correct 266,120selected answer correct 10,120selected answer correct Uselected answer correct
    Total $3,235,720selected answer correct $3,229,420selected answer correct Fselected answer correct

Solutions

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