Question

Exercise 10-10 (Video)

Chubbs Inc.’s manufacturing overhead budget for the first quarter of 2020 contained the following data.

Variable Costs				Fixed Costs
Indirect materials		$11,300		Supervisory salaries		$37,000
Indirect labor		10,000		Depreciation		6,100
Utilities		7,200		Property taxes and insurance		7,300
Maintenance		5,500		Maintenance		4,200

Actual variable costs were indirect materials $14,600, indirect labor $9,400, utilities $9,200, and maintenance $4,800. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,200. The actual activity level equaled the budgeted level.

All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance.

(a) Prepare a manufacturing overhead flexible budget report for the first quarter. (List variable costs before fixed costs.)

(b) Prepare a responsibility report for the first quarter.

Answer 1

			Budget	Actual	Difference
Variable costs
Indirect Materials			11,300	14,600	3,300	U
Indirect labor			10,000	9,400	600	F
Utilities			7,200	9,200	2,000	U
Maintenance			5,500	4,800	700	F
Total variable costs			34,000	38,000	4,000	U
Fixed costs
Supervisory salaries			37,000	37,000	0	N
Depreciation			6,100	6,100	0	N
Prop.taxes & insurance			7,300	8,200	900	U
Maintenance			4,200	4,200	0	N
total fixed costs			54,600	55,500	900	U
total costs			88,600	93,500	4,900	U
		Manufacturing overhead Responsibility Report
			Budget	Actual	Difference
Controllable costs
Indirect materials			11,300	14,600	3,300	U
indirect labor			10,000	9,400	600	F
Utilities			7,200	9,200	2,000	U
Maintenance			9,700	9,000	700	F
Supervisory salaries			37,000	37,000	0	N
total costs			75,200	79,200	4,000	U