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 Campers Trailers Actual Campers Trailers Combined $195,600 $278,000 $ 473,600 $195,100 $273,000 $468, 100 311,600 106,600 207,000 Combined Raw materials Employee wages Dept. manager salary Supplies used Depreciation-Equip. 106,eee 285,600 43,800 34, 200 61,500 126,5ee 188,00e 4,800 6,300 69,750 313,600 98,400 123,000 126,000 189,000 9,800 9,300 14,500 145,100 52,200 96, e00 92,200 126,400 44,5ee 31,400 63,000 3,000 5,200 72,550 53,900 91,600 ces 5,600 9,200 69,750 10,400 15,500 139,500 $521,950 $839,050 $1,361,000 $521,350 $840,150 $1,361,500 Utilities Building rent Office departsent costs 6,800 72,550 Totals The office department's annual budget and its actual costs follow Actual Budget $79,000 $ 85,000 42,500 18,000 $139,500 $145,100 Plant manager salary Other office salaries Other office costs 25,400 34,700 Totals

Answer 1

solution: a)Department manager -Camper Dept Budgeted Actual Over/(under) Budget Controllable Costs: raw material 195600 195100 -500 employee wages 106000 106600 600 supplies used 34200 31400 -2800 depreciation - equipment 61500 63000 1500 Total 397300 396100 -1200 Budgeted | Actual Over/(under) Budget b)Department manager - Trailor Dept Controllable Costs: raw material employee wages supplies used depreciation - equipment Total 278000 273000 205600 207000 92200 91600 126500 126000 702300 697600 -5000 1400 -600 -500 -4700 Budgeted Actual Over/(under) Budget c) Plant Manager-Indiana Plant Controllable Costs: Dept. Manager salaries utilities building rent other office salaries other office cost camper dept Trailor dept Total 96000 98400 10400 9800 15500 14500 42500 25400 18000 34700 397300396100 702300 697600 1282000 1276500 2400 -600 -1000 -17100 16700 -1200 -4700 -5500