The Mixing Department manager of Crede Company is able to control all overhead c

Question

The Mixing Department manager of Crede Company is able to control all overhead costs except rent, property taxes, and salaries. Budgeted monthly overhead costs for the Mixing Department, in alphabetical order, are:

Indirect labor $13,680 Property taxes $1,140
Indirect materials 8,550 Rent 2,052
Lubricants 1,938 Salaries 11,400
Maintenance 3,990 Utilities 5,700


Actual costs incurred for January 2010 are indirect labor $13,908; indirect materials $11,628; lubricants $1,881; maintenance $3,990; property taxes $1,254; rent $2,052; salaries $11,400; and utilities $7,410.

Complete the responsibility report for January 2010.

Explanation / Answer

Responsibility Accounting: A system of accountability in which managers are held responsible for those items of revenue and cost- and only those items-over which they can exert significant control. The managers are held responsible for differences between budgeted and actual results.                       The responsibility report for January 2010 Details                              Budgeted Cost            Actual Cost               Differece Cost Indirect labor                    $13,680                      $13,908                      228 Indirect Material                    8,550                        11,628                  3,078 Lubricants                              1,938                          1,881                       57 Maintenance                           3,990                          3,990                        - Property taxes                         1,140                          1,254                   114 Rent                                        2,052                          2,052                       - Salaries                                  11,400                      11,400                        - Utilities                                     5,700                        7,410                   1,710 From the above report the indirect labor ,indirect material ,property taxes and utilities amounts are higher than the budgeted costs. so the managers are held the responsibility to control these costs. Details                              Budgeted Cost            Actual Cost               Differece Cost Indirect labor                    $13,680                      $13,908                      228 Indirect Material                    8,550                        11,628                  3,078 Lubricants                              1,938                          1,881                       57 Maintenance                           3,990                          3,990                        - Property taxes                         1,140                          1,254                   114 Rent                                        2,052                          2,052                       - Salaries                                  11,400                      11,400                        - Utilities                                     5,700                        7,410                   1,710 From the above report the indirect labor ,indirect material ,property taxes and utilities amounts are higher than the budgeted costs. so the managers are held the responsibility to control these costs.

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