PLEASE ASSIST. THANK YOU! Billie Whitehorse, the plant manager of Travel Free’s

Question

PLEASE ASSIST. THANK YOU!

Billie Whitehorse, the plant manager of Travel Free’s Indiana plant, is responsible for all of that plant’s costs other than her own salary. The plant has two operating departments and one service department. The camper and trailer operating departments manufacture different products and have their own managers. The office department, which Whitehorse also manages, provides services equally to the two operating departments. A budget is prepared for each operating department and the office department. The company’s responsibility accounting system must assemble information to present budgeted and actual costs in performance reports for each operating department manager and the plant manager. Each performance report includes only those costs that a particular operating department manager can control: raw materials, wages, supplies used, and equipment depreciation. The plant manager is responsible for the department managers’ salaries, utilities, building rent, office salaries other than her own, and other office costs plus all costs controlled by the two operating department managers. The annual departmental budgets and actual costs for the two operating departments follow.

Prepare responsibility accounting performance reports that list costs controlled by the following. In each report, include the budgeted and actual costs and show the amount that each actual cost is over or under the budgeted amount.

Billie Whitehorse, the plant manager of Travel Free’s Indiana plant, is responsible for all of that plant’s costs other than her own salary. The plant has two operating departments and one service department. The camper and trailer operating departments manufacture different products and have their own managers. The office department, which Whitehorse also manages, provides services equally to the two operating departments. A budget is prepared for each operating department and the office department. The company’s responsibility accounting system must assemble information to present budgeted and actual costs in performance reports for each operating department manager and the plant manager. Each performance report includes only those costs that a particular operating department manager can control: raw materials, wages, supplies used, and equipment depreciation. The plant manager is responsible for the department managers’ salaries, utilities, building rent, office salaries other than her own, and other office costs plus all costs controlled by the two operating department managers. The annual departmental budgets and actual costs for the two operating departments follow.

Explanation / Answer

Answer

Answer 1

Answer (a)

Responsibility Accounting Performance report

Dept. Manager , Camper Department

Figures in $

Campers

Budget

Actual

Difference

  Raw materials

$

195400

$

194,600

800

  Employee wages

104,150

107,600

-3450

  Supplies used

34,200

32,300

1900

  Depreciation—Equip.

62,000

62,400

-400

  Totals

$

395750

$

396900

-1,150

Answer (b)

Responsibility Accounting Performance report

Dept. Manager , Trailers Department

Figures in $

Trailers

Budget

Actual

Difference

  Raw materials

$

276,600

$

273,600  

3,000

  Employee wages

205,800

207,000

-1200

  Supplies used

90,800

92,500

-1700

  Depreciation—Equip.

126,000

126,500

-500

  Totals

$

699200

$

699600

-400

Answer (c )

Responsibility Accounting Performance report

Plant Manager, Indiana Plant

Figures in $

Combined

Combined

Difference

  Raw materials

$

472,000

$

468,200

3,800

  Employee wages

309,950

314,600

-4650

  Dept. manager salary

96,100

98,100

-2000

  Supplies used

125,000

124,800

200

  Depreciation—Equip.

188,000

188,900

-900

  Utilities

10,200

8,900

1300

  Building rent

15,100

14,300

800

  Office department costs

48500

63100

-14600

(133500-85000)/(153100-90000)

  Totals

$

1264850

$

1280900

-16,050

Responsibility Accounting Performance report

Dept. Manager , Camper Department

Figures in $

Campers

Budget

Actual

Difference

  Raw materials

$

195400

$

194,600

800

  Employee wages

104,150

107,600

-3450

  Supplies used

34,200

32,300

1900

  Depreciation—Equip.

62,000

62,400

-400

  Totals

$

395750

$

396900

-1,150

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