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	$	195,400		$	276,400		$	471,800		$	195,200		$	274,200		$	469,400
Employee wages		104,300			205,400			309,700			107,000			207,400			314,400
Dept. manager salary		44,100			52,900			97,000			44,200			53,600			97,800
Supplies used		34,400			91,200			125,600			33,200			91,300			124,500
Depreciation—Equip.		62,000			127,000			189,000			61,800			126,500			188,300
Utilities		4,600			5,000			9,600			4,800			6,800			11,600
Building rent		6,000			9,300			15,300			6,100			8,800			14,900
Office department costs		66,750			66,750			133,500			68,550			68,550			137,100
Totals	$	517,550		$	833,950		$	1,351,500		$	520,850		$	837,150		$	1,358,000

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

	Budget			Actual
Plant manager salary	$	88,000		$	88,000
Other office salaries		40,500			25,700
Other office costs		5,000			23,400
Totals	$	133,500		$	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.

Answer 1