1-2 PROBLEM SET B Britney lant\'s co other than her own salary. The plant has tw
ID: 2518084 • Letter: 1
Question
1-2
PROBLEM SET B Britney lant's co other than her own salary. The plant has two operating departments and one service department. The re sts Brown, the plant manager of LMN Co.'s Chicago plant, is responsible for all of that p hwasher operating departments manufacture different products and have their own man- Problem 24-1B also manages, provides services equally to the two operating Responsibility occounting agers. The office department, which Brown departments. A monthly budget is prepared for each operating department and the office department. The performance reports sibility accounting system must assemble information to present budgeted and actual controllable and budgeted the plant manager. Each perfor- costs costs in performance reports for each operating department manager and mance 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 t department managers' salaries, utilities, building rent, office salaries other than her own, and other office coss plus all costs controlled by the two operating department managers. The April departmental and actual costs for the two operating departments follow P1 Budget Retrigerators Dishwashers Co Dishwashers Combined $ 600,000 250,000 104,000 24,000 90000 B,000 80,000 141,000 $1.337 000 $202,000 587000 256.200 101.500 23.700 90,000 55,200 82.300 150,000 1,345,900 5385,000 Raw materials Employee wages Dept. maneger salary Supplies used Deprecistion-Equip Utiities Bulding rent Office departmet costs Totals $000,000 170,000 55,000 15.000 53,000 30,000 63,000 0500 5200,000 80,000 49,000 9 000 37,000 8,000 17,000 55.000 14,000 53,000 34,500 65,800 5,000 81,500 46,500 9,700 .000 20.700 16,500 5,000 488 903 The office department's budget and its actual costs lor April follow BudgetActual Plant manager salery Other office selaries Other office costs Totals $????? $85,000 21,000 29,800 5141.000 $150,000 Required 1. Prepare responsil trolled by the following a. Manager of the refrigerator department b. Manager of the dishwasher department. c. Manager of the Chicago plant n each report, include the budgeted and actual cots for the month and show the amount by which 3 900 uch actual cost is over or under the hudgeted amount. ndlysis Component 2. Did the plant manager or the operating department managers better manage costs? ExplainExplanation / Answer
Answer:
1
a)
Responsibility Accounting Performance Report
Dept. Manager, Camper Department
For the Year
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
Raw materials
$195,000
$194,200
-800
Employee wages
104,000
106,600
2600
Supplies used
33,000
31,700
-1300
Depreciation—Equipment
60,000
60,000
0
Totals
$392,000
$392,500
500
b)
Responsibility Accounting Performance Report
Dept. Manager, Trailer Department
For the Year
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
Raw materials
$275,000
$273,200
($1,800)
Employee wages
205,000
206,400
1,400
Supplies used
90,000
91,600
1,600
Depreciation—Equipment
125,000
125,000
0
Totals
$695,000
$696,200
$1,200
c)
Responsibility Accounting Performance Report
Plant Manager, Indiana Plant
For the Year
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
Dept. manager salaries
$95,000
$97,500
$2,500
Utilities
9,000
8,300
-700
Building rent
15,000
14,000
-1000
Other office salaries
32,500
30,100
-2400
Other office costs
25,000
23,000
-2000
Camper department
392,000
392,500
500
Trailer department
695,000
696,200
1,200
Total
$1,263,500
$1,261,600
-1900
____________________________________________________________
2
Did the plant manager or the operating department manager better manage the cost
Answer:
As comparing operating department of trailers and camper the managers has not manage the cost better because in responsibility accounting performance of camper and trailers department shows over budget of $500 and $ 1200 respectively which is not good for the department.
Plant has manage the cost better because the Responsibility Accounting Performance Report of overall Indaina plant has under budget of $1900 which is good for the company which means he has good control over cost and expenses of overall plant. It will be beneficial to the company that plant manager decision must be implemented
Responsibility Accounting Performance Report
Dept. Manager, Camper Department
For the Year
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
Raw materials
$195,000
$194,200
-800
Employee wages
104,000
106,600
2600
Supplies used
33,000
31,700
-1300
Depreciation—Equipment
60,000
60,000
0
Totals
$392,000
$392,500
500
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