Question

Exercise 22-10 Chubbs Inc.'s manufacturing overhead budget for the first quarter of 2017 contained the following data. Variable Costs Fixed Costs Indirect materials $11,800 Supervisory salaries Indirect labor 10,700 Depreciation Utilities 8,000 Property taxes and insurance Maintenance 5,600 Maintenance $35,500 6,700 7,600 5,900 Actual variable costs were indirect materials $14,700, indirect labor $9,600, utilities $9,800, and maintenance $5,100. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,600. 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.

Answer 1

Ans. A	CHUBBS INC.
	Manufacturing Overhead Flexible Budget Report
	For the Quarter Ended March 31, 2020
		Budget	Actual	Difference	Favorable or Unfavorable
	Variable costs:
	Indirect materials	$11,800	$14,700	$2,900	Unfavorable
	Indirect labor	$10,700	$9,600	$1,100	Favorable
	Utilities	$8,000	$9,800	$1,800	Unfavorable
	Maintenance	$5,600	$5,100	$500	Favorable
	Total variable overhead costs (a)	$36,100	$39,200	$3,100	Unfavorable
	Fixed costs:
	Supervisory salaries	$35,500	$35,500	$0	none
	Depreciation	$6,700	$6,700	$0	none
	Property taxes and insurance	$7,600	$8,600	$1,000	Unfavorable
	Maintenance	$5,900	$5,900	$0	none
	Total fixed overhead costs (b)	$55,700	$56,700	$1,000	Unfavorable
	Total Manufacturing overhead (a + b)	$91,800	$95,900	$4,100	Unfavorable
Ans. B	CHUBBS INC.
	Manufacturing Overhead Responsibility Report
	For the Quarter Ended March 31, 2020
	Controllable costs:	Budget	Actual	Difference	Favorable or Unfavorable
	Indirect materials	$11,800	$14,700	$2,900	Unfavorable
	Indirect labor	$10,700	$9,600	$1,100	Favorable
	Utilities	$8,000	$9,800	$1,800	Unfavorable
	Maintenance	$11,500	$11,000	$500	Favorable
	Supervisiory salaries	$35,500	$35,500	$0	None
	Total controllable costs	$77,500	$80,600	$3,100	Unfavorable
	*Calculations for Maintenance :
		Budget	Actual
	Variable maintenance	$5,600	$5,100
	Fixed maintenace	$5,900	$5,900
	Total Maintenance	$11,500	$11,000
	*Property taxes and insurance & Depreciation costs are not controllable.
	*Increase in costs from budget to actual = Unfavorable.
	*Decrease in costs from budget to actual = Favorable.