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. Raw materials Employee wages Dept. manager salary Supplies used Depreciation-Equip. Utilities Building rent Office department costs Totals Budget Actual Campers Trailers Combined Campers Trailers Combined $ 195,900 $ 278,000 $ 473,900 $ 195,000 $274,000 $ 469,000 104, 100 205,800 309,900 107,200 208,000 3 15, 200 43, 400 52,800 96,200 44,100 53,600 97,700 34,400 90,400 124,800 32,900 92,200 125, 100 61,000 126,000 187,000 63,000 125,500 188,500 4,600 6,000 10,600 3,600 5,000 8,600 6,000 10,000 16,000 5,900 8,500 14,400 71,750 71,750 143,50079,550 79,550 159,100 $ 521,150 $ 840,750 $1,361,900 $ 531,250 $ 846,350 $1,377,600 The office department's annual budget and its actual costs follow. Plant manager salary Other office salaries Other office costs Totals Budget Actual $ 84,000 $ 84,000 44,500 26,500 15,000 48,600 $143,500 $159,100

Answer 1

Requirement 1A Responsibility Accounting Performance Report Dep. Manager, Camper Department For the Year Over (Under) Budgeted Actual Budget Amount Amount Controllable Costs Raw Materials Employee Wages Supplies used Depreciation-Equip. 1,95,900 $ 1,95,000 $ $ 1,04,100 $ 1,07,200 $ 34,400 $ 61,000 $ 006 3,100 32,900 $ 63,000 $ -1,500 $ 2,000 3,95,400 $ 3,98,100 $ Totals 2,700

Requirement 1B Responsibility Accounting Performance Report Dep. Manager, Trailer Department For the Year Over (Under) Budgeted Actual Budget Amount Amount Controllable Costs Raw Materials 2,78,000 $ 2,74,000 $ 2,05,800 $ 2,08,000 $ 90,400 $ $1,26,000 $ 1,25,500 $ -4,000 Employee Wages Supplies used Depreciation-Equip 2,200 92,200 $ $ 1,800 -500 Totals 7,00,200 $ 6,99,700 $ -500

Requirement 1C Responsibility Accounting Performance Report Plant Manager, Indiana Plant For the Year Over (Under) Budgeted Actual Budget Amount Amount Controllable Costs Dept. Manager Salary 96,200 $ 10,600 $ $ 97,700 $ 8,600 $ 14,400 $ 26,500 $ 48,600 $ $ 1,500 $ Utilities -2,000 Building Rent Other Officer salaries Other Office costs 16,000 $ $ -1,600 44,500 $ 15,000 $ -18,000 $ 33,600 Totals 1,82,300 $ 1,95,800 $ 13,500