Question

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

Variable Costs

Indirect materials$11,200

Indirect labor10,600

Utilities7,000

Maintenance5,700

Fixed Costs

Supervisory salaries$35,600

Depreciation7,000

Property taxes and insurance7,100

Maintenance5,500

Actual variable costs were indirect materials $14,500, indirect labor $9,600, utilities $9,400, and maintenance $5,200. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,200. The actual activity level equaled the budgeted level.

(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.

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

Answer 1

Chubbs Inc.
Manufacturing overhead flexible budget report
For the quarter ended March 31, 2020
	Budget	Actual costs	Differences
Variable costs:
Indirect material	$           11,200	$ 14,500	3,300	Unfavorable
Indirect labor	$           10,600	$    9,600	1,000	Favorable
Utilities	$              7,000	$    9,400	2,400	Unfavorable
Maintenance	$              5,700	$    5,200	500	Favorable
Total Variable cost	$           34,500	$ 38,700	4,200	Unfavorable
Fixed costs
Supervision Salaries	$           35,600	$ 35,600	-	Neither favorable nor unfavorable
Depreciation	$              7,000	$    7,000	-	Neither favorable nor unfavorable
Property taxes and insurance	$              7,100	$    8,200	1,100	Unfavorable
Maintenance	$              5,500	$    5,500	-
Total Fixed costs	$           55,200	$ 50,800	4,400	Favorable
Total costs	$           89,700	$ 89,500	200	Favorable
Chubbs Inc.
Manufacturing overhead responsibility report
For the quarter ended March 31, 2020
	Budget	Actual costs	Differences
Indirect material	$           11,200	$ 14,500	$    3,300	Unfavorable
Indirect labor	$           10,600	$    9,600	$    1,000	Favorable
Utilities	$              7,000	$    9,400	$    2,400	Unfavorable
Maintenance	$              5,700	$    5,200	$        500	Favorable
Supervision Salaries	$           35,600	$ 35,600	$           -	Neither favorable nor unfavorable
Maintenance	$              5,500	$    5,500	$           -	Neither favorable nor unfavorable
Total costs	$           75,600	$ 79,800	$    4,200	Unfavorable

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