In: Accounting
Problem 22-1A Responsibility accounting performance reports; controllable and budgeted costs LO P1
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 | $ | 195,600 | $ | 277,400 | $ | 473,000 | $ | 194,200 | $ | 273,200 | $ | 467,400 | |||||||
Employee wages | 105,700 | 205,200 | 310,900 | 107,400 | 206,600 | 314,000 | |||||||||||||
Dept. manager salary | 43,900 | 52,900 | 96,800 | 44,600 | 53,100 | 97,700 | |||||||||||||
Supplies used | 33,800 | 91,600 | 125,400 | 32,000 | 91,000 | 123,000 | |||||||||||||
Depreciation—Equip. | 61,000 | 127,000 | 188,000 | 62,400 | 126,500 | 188,900 | |||||||||||||
Utilities | 4,000 | 6,200 | 10,200 | 4,200 | 6,200 | 10,400 | |||||||||||||
Building rent | 6,000 | 10,100 | 16,100 | 5,600 | 8,600 | 14,200 | |||||||||||||
Office department costs | 67,750 | 67,750 | 135,500 | 68,550 | 68,550 | 137,100 | |||||||||||||
Totals | $ | 517,750 | $ | 838,150 | $ | 1,355,900 | $ | 518,950 | $ | 833,750 | $ | 1,352,700 | |||||||
The office department’s annual budget and its actual costs
follow.
Budget | Actual | |||||
Plant manager salary | $ | 87,000 | $ | 89,000 | ||
Other office salaries | 42,500 | 25,900 | ||||
Other office costs | 6,000 | 22,200 | ||||
Totals | $ | 135,500 | $ | 137,100 | ||
Required:
1. Prepare responsibility accounting performance
reports that list costs controlled by the following. In each
report, include the budgeted and actual costs and show the amount
that each actual cost is over or under the budgeted amount.
a. Manager of the camper department.
b. Manager of the trailer department.
c. Manager of the Indiana plant.
Prepare responsibility accounting performance reports that list costs controlled by the following. In each report, include the budgeted and actual costs and show the amount that each actual cost is over or under the budgeted amount for manager of the camper department. (Under budget amounts should be indicated by a minus sign.)
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Prepare responsibility accounting performance reports that list costs controlled by the following. In each report, include the budgeted and actual costs and show the amount that each actual cost is over or under the budgeted amount for manager of the trailer department. (Under budget amounts should be indicated by a minus sign.)
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Prepare responsibility accounting performance reports that list costs controlled by the following. In each report, include the budgeted and actual costs and show the amount that each actual cost is over or under the budgeted amount for manager of the Indiana plant. (Under budget amounts should be indicated by a minus sign.)
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