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	$	195,800		$	278,000		$	473,800		$	194,300		$	274,000		$	468,300
Employee wages		105,900			205,400			311,300			107,600			206,400			314,000
Dept. manager salary		43,500			53,000			96,500			44,400			53,800			98,200
Supplies used		34,000			90,200			124,200			32,600			91,600			124,200
Depreciation—Equip.		62,000			127,000			189,000			61,200			126,000			187,200
Utilities		5,200			5,400			10,600			3,600			6,200			9,800
Building rent		6,300			9,500			15,800			5,900			8,600			14,500
Office department costs		65,750			65,750			131,500			74,550			74,550			149,100
Totals	$	518,450		$	834,250		$	1,352,700		$	524,150		$	841,150		$	1,365,300

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

	Budget			Actual
Plant manager salary	$	79,000		$	96,000
Other office salaries		40,500			25,600
Other office costs		12,000			27,500
Totals	$	131,500		$	149,100

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.

• Req 1A
• Req 1B
• Req 1C

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

Travel Free Requirement a Manager Camper Department For the Year Budgeted Actual Over (Under) Amount Amount Budget Controllable Costs Raw materials 195800 194300 -1500 Employee wages 105900 107600 1700 Supplies used 34000 32600 -1400 Depreciation Equipment 62000 61200 -800 Totals 397700 395700 -2000 Requirement b Manager, Trailer Department For the Year Budgeted Actual Over (Under) Amount Amount Budget Controllable Costs Raw materials 278000 274000 -4000 Employee wages 205400 206400 1000 Supplies used 9020091600 1400 Depreciation Equipment 127000 126000 -1000 Totals 700600 698000 -2600 Requirement Manager, Indiana Plant For the Year Budgeted Actual Over (Under) Amount Amount Budget Controllable Costs Dept. manager salaries Utilities Building rent Other office salaries Other office costs Camper department Trailer department Totals 96500 10600 15800 40500 12000 397700 700600 1273700 98200 9800 14500 25600 27500 395700 698000 1269300 1700 -800 - 1300 -14900 15500 -2000 -2600 -4400