Problem 10-6A from Weygandt, Managerial Accounting, 7e Durham Company uses a res
ID: 2449230 • Letter: P
Question
Problem 10-6A from Weygandt, Managerial Accounting, 7e
Durham Company uses a responsibility reporting system. It has divisions in Denver, Seattle, and San Diego. Each division has three production departments: Cutting, Shaping, and Finishing. The responsibility for each department rests with a manager who reports to the division production manager. Each division manager reports to the vice president of production. There are also vice presidents for marketing and finance. All vice presidents report to the president.
In January 2017, controllable actual and budget manufacturing overhead cost data for the departments and divisions were as shown below.
Manufacturing Overhead
Actual
Budget
$73,000
$70,000
47,900
46,000
20,500
18,000
20,100
17,000
22,000
20,000
$183,500
$171,000
Vice President
Actual
Budget
Prepare the Manufacturing overhead—Cutting Department manager—Seattle division responsibility report.
Prepare the Manufacturing overhead—Seattle division manager responsibility report.
Rank the comparative performances of department managers in the Seattle Division.
Prepare the Manufacturing overhead—vice president of production responsibility report.
Rank the comparative performances of division managers.
Prepare the Manufacturing overhead and expenses—president responsibility report.
Rank the comparative performances of vice presidents.
Manufacturing Overhead
Actual
Budget
Individual costs—Cutting Department—Seattle Indirect labor$73,000
$70,000
Indirect materials47,900
46,000
Maintenance20,500
18,000
Utilities20,100
17,000
Supervision22,000
20,000
$183,500
$171,000
Explanation / Answer
Manufacturing Overheads for Cutting Departments Manager Responsibility Report Particulars Actual Budget Variances Indirect Labour 73000 70000 -3000 U Indirect Materials 47900 46000 -1900 U Maintenance 20500 18000 -2500 U Utilities 20100 17000 -3100 U Supervision 22000 20000 -2000 U Total 183500 171000 -12500 U Manufacturing Overheads for Seattle Division Manager Responsibility Report Particulars Actual Budget Variances Seattle Division Manager Office Cost 52500 51000 -1500 U Cutting Deparment Manager Seattle Report 183500 171000 -12500 U Shaping Depatment Manager Seattle Report 158000 148000 -10000 U Finishing Depatment Manager Seattle Report 210000 205000 -5000 U Total 604000 575000 -29000 U Rank the comparative performances of department managers in the Seattle Division. Variances Rank Cutting Deparment Manager Seattle -12500 3 Shaping Depatment Manager Seattle -10000 2 Finishing Depatment Manager Seattle -5000 1 Manufacturing overhead—vice president of production responsibility report. Particulars Actual Budget Variances Vice President of Production Office Expense 65000 64000 -1000 U Seattle Division Manager Responsibility Report 604000 575000 -29000 U Denver Division Manager Responsibility Report 678000 673000 -5000 U San Diego Division Manager Responsibility Report 722000 715000 -7000 U Total 2069000 2027000 -42000 U Rank the comparative performances of division managers. Variance Rank Seattle Division Manager -29000 3 Denver Division Manager -5000 1 San Diego Division Manager -7000 2 Manufacturing overhead and expenses—president responsibility report. Particulars Actual Budget Variances President Office Expenses 76400 74200 -2200 U Vice President of Production Reposibility Report 2069000 2027000 -42000 U Vice President Marketing Responsibility Report 133600 130000 -3600 U Vice President Fianance Responsibility Report 109000 104000 -5000 U Total 2388000 2335200 -52800 U Rank the comparative performances of vice presidents. Variances Rank Vice President of Production -42000 3 Vice President Marketing -3600 1 Vice President Fianance -5000 2
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