Question

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.)

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

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.)

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

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.)

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

Answer 1