Question

Billie Whitehorse, the plant manager of Travel Free’s Indiana plant, is responsible for all of that plant’s costs other than her own salary. The plant has two operating departments and one service department. The camper and trailer operating departments manufacture different products and have their own managers. The office department, which Whitehorse also manages, provides services equally to the two operating departments. A budget is prepared for each operating department and the office department. The company’s responsibility accounting system must assemble information to present budgeted and actual costs in performance reports for each operating department manager and the plant manager. Each performance report includes only those costs that a particular operating department manager can control: raw materials, wages, supplies used, and equipment depreciation. The plant manager is responsible for the department managers’ salaries, utilities, building rent, office salaries other than her own, and other office costs plus all costs controlled by the two operating department managers. The annual departmental budgets and actual costs for the two operating departments follow.

	Budget										Actual
	Campers			Trailers			Combined			Campers			Trailers			Combined
Raw materials	$	195,700		$	277,600		$	473,300		$	194,400		$	273,600		$	468,000
Employee wages		105,500			206,200			311,700			107,800			208,000			315,800
Dept. manager salary		43,100			52,400			95,500			44,200			54,100			98,300
Supplies used		33,200			91,200			124,400			31,400			91,900			123,300
Depreciation—Equip.		61,500			126,500			188,000			61,200			126,000			187,200
Utilities		3,600			5,400			9,000			3,000			6,200			9,200
Building rent		5,700			9,100			14,800			6,100			8,900			15,000
Office department costs		66,750			66,750			133,500			78,550			78,550			157,100
Totals	$	515,050		$	835,150		$	1,350,200		$	526,650		$	847,250		$	1,373,900

The office department’s annual budget and its actual costs follow.

	Budget			Actual
Plant manager salary	$	83,000		$	86,000
Other office salaries		36,500			26,000
Other office costs		14,000			45,100
Totals	$	133,500		$	157,100

Required:
1. Prepare responsibility accounting performance reports that list costs controlled by the following.
a. Manager of the Camper department.
b. Manager of the Trailer department.
c. Manager of the Indiana plant.

In each report, include the budgeted and actual costs and show the amount that each actual cost is over or under the budgeted amount.

	Responsibility Accounting Performance Report Dept. Manager, Camper Department For the Year Budgeted Amount Actual Amount Over (Under) Budget Controllable Costs Totals

	Responsibility Accounting Performance Report Dept. Manager, Trailer Department For the Year Budgeted Amount Actual Amount Over (Under) Budget Controllable Costs Totals

	Responsibility Accounting Performance Report Plant Manager, Indiana Plant For the Year Budgeted Amount Actual Amount Over (Under) Budget Controllable Costs Totals

Answer 1

a.

Responsibility Accounting Performance Report Dept.Manager, Camper Department
	For The Year
	Budgeted amount	Actual amount	Over (Under) budget
Controllable cost:
Raw materials	$195,700	$194,400	$1,300
Employee wages	105,500	107,800	(2,300)
Supplies used	33,200	31,400	1,800
Depreciation-Equipment	61,500	61,200	300
Totals	$395,900	$394,800	$1,100

b.

Responsibility Accounting Performance Report Dept.Manager, Trailer Department
	For The Year
	Budgeted amount	Actual amount	Over (Under) budget
Controllable cost:
Raw materials	$277,600	$273,600	$4,000
Employee wages	206,200	208,000	(1,800)
Supplies used	91,200	91,900	(700)
Depreciation-Equipment	126,500	126,000	500
Totals	$701,500	$699,500	$2,000

c.

Responsibility Accounting Performance Report Plant Manager, Indiana Plant
	For The Year
	Budgeted amount	Actual amount	Over (Under) budget
Controllable costs:
Dept.manager salary	$95,500	$98,300	$(2,800)
Utilities	9,000	9,200	(200)
Building rent	14,800	15,000	(200)
Other office salaries	36,500	26,000	10,500
Other office costs	14,000	45,100	(31,100)
Camper department-Controllable cost	395,900	394,800	1,100
Trailer department-Controllable cost	701,500	699,500	2,000
Totals	$1,267,200	$1,287,900	$(20,700)