Brief Exercise 24-6 In the Assembly Department of Hannon Company, budgeted and a

Question

Brief Exercise 24-6 In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2017 were as follows. Budget Actual Indirect materials Indirect labor Utilities Supervision 14,200 19,000 10,200 5,800 $13,600 19,600 10,800 5,800 All costs are controllable by the department manager Prepare a responsibility report for April for the cost center HANNON COMPANY For the Month Ended April 30, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Controllable Cost Budget Actual

Explanation / Answer

MANUFACTURING OVERHEADS RESPONSIBILITY REPORT COST BUDGET ACTUAL VARIANCE FAV/UNFAV/NA Indirect material 14200 13600 600 FAVORABLE Indirect labour 19000 19600 -600 UNFAVORABLE Utilities 10200 10800 -600 UNFAVORABLE Supervision 5800 5800 0 NEITHER FAV NOR UNFAV 49200 49800 -600 I II III sales 2062000 3914000 3905000 Controllable Margin 848640 2161520 4103120 Average Operating Assets 4992000 8006000 12068000 Return on Investment 17% 27% 34% (Controllable margin / Return on investment*100)

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