Question 1 Variable Costs Fixed Costs CHUBBS INC. Manufacturing Overhead Flexibl

Question

Question 1

Variable Costs

Fixed Costs

CHUBBS INC.
Manufacturing Overhead Flexible Budget Report
For the Quarter Ended March 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

CHUBBS INC.
Manufacturing Overhead Responsibility Report
For the Quarter Ended March 31, 2017

Difference

Controllable Costs

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

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Question 1

Chubbs Inc.’s manufacturing overhead budget for the first quarter of 2017 contained the following data.

Variable Costs

Fixed Costs

Indirect materials $11,500 Supervisory salaries $36,900 Indirect labor 11,000 Depreciation 7,100 Utilities 7,500 Property taxes and insurance 8,000 Maintenance 5,900 Maintenance 5,000
Actual variable costs were indirect materials $14,500, indirect labor $9,200, utilities $9,100, and maintenance $5,300. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,800. The actual activity level equaled the budgeted level.

All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance.

(a) Prepare a manufacturing overhead flexible budget report for the first quarter. (List variable costs before fixed costs.)

CHUBBS INC.
Manufacturing Overhead Flexible Budget Report
For the Quarter Ended March 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

Indirect LaborProperty Taxes and InsuranceTotal CostsTotal Fixed CostsDepreciationUtilitiesFixed CostsIndirect MaterialsMaintenanceVariable CostsTotal Variable CostsSupervisory Salaries

UtilitiesProperty Taxes and InsuranceIndirect MaterialsMaintenanceFixed CostsSupervisory SalariesTotal CostsVariable CostsDepreciationIndirect LaborTotal Fixed CostsTotal Variable Costs

$

$

$

FavorableUnfavorableNeither Favorable nor Unfavorable

Indirect MaterialsFixed CostsMaintenanceIndirect LaborTotal CostsTotal Fixed CostsTotal Variable CostsProperty Taxes and InsuranceUtilitiesSupervisory SalariesVariable CostsDepreciation

FavorableUnfavorableNeither Favorable nor Unfavorable

Total CostsTotal Fixed CostsDepreciationTotal Variable CostsUtilitiesSupervisory SalariesFixed CostsVariable CostsIndirect LaborIndirect MaterialsMaintenanceProperty Taxes and Insurance

FavorableUnfavorableNeither Favorable nor Unfavorable

Supervisory SalariesTotal Fixed CostsProperty Taxes and InsuranceIndirect MaterialsTotal CostsTotal Variable CostsFixed CostsIndirect LaborUtilitiesDepreciationVariable CostsMaintenance

FavorableUnfavorableNeither Favorable nor Unfavorable

Total Fixed CostsVariable CostsDepreciationTotal CostsTotal Variable CostsUtilitiesFixed CostsSupervisory SalariesIndirect LaborIndirect MaterialsMaintenanceProperty Taxes and Insurance

FavorableUnfavorableNeither Favorable nor Unfavorable

Variable CostsIndirect LaborSupervisory SalariesTotal Variable CostsTotal CostsFixed CostsDepreciationProperty Taxes and InsuranceIndirect MaterialsMaintenanceTotal Fixed CostsUtilities

Total Fixed CostsProperty Taxes and InsuranceIndirect MaterialsDepreciationVariable CostsFixed CostsTotal CostsSupervisory SalariesTotal Variable CostsUtilitiesIndirect LaborMaintenance

FavorableUnfavorableNeither Favorable nor Unfavorable

Total Fixed CostsVariable CostsSupervisory SalariesUtilitiesFixed CostsTotal Variable CostsIndirect LaborMaintenanceDepreciationProperty Taxes and InsuranceIndirect MaterialsTotal Costs

FavorableUnfavorableNeither Favorable nor Unfavorable

Total Fixed CostsTotal Variable CostsUtilitiesTotal CostsProperty Taxes and InsuranceSupervisory SalariesVariable CostsMaintenanceIndirect LaborDepreciationFixed CostsIndirect Materials

FavorableUnfavorableNeither Favorable nor Unfavorable

Supervisory SalariesTotal Variable CostsDepreciationMaintenanceIndirect LaborVariable CostsTotal CostsFixed CostsIndirect MaterialsTotal Fixed CostsProperty Taxes and InsuranceUtilities

FavorableUnfavorableNeither Favorable nor Unfavorable

DepreciationVariable CostsTotal Fixed CostsFixed CostsIndirect LaborMaintenanceProperty Taxes and InsuranceSupervisory SalariesIndirect MaterialsTotal CostsTotal Variable CostsUtilities

FavorableUnfavorableNeither Favorable nor Unfavorable

Total CostsFixed CostsSupervisory SalariesIndirect MaterialsMaintenanceProperty Taxes and InsuranceIndirect LaborTotal Fixed CostsDepreciationVariable CostsTotal Variable CostsUtilities

$

$

$

FavorableUnfavorableNeither Favorable nor Unfavorable

(b) Prepare a responsibility report for the first quarter.

CHUBBS INC.
Manufacturing Overhead Responsibility Report
For the Quarter Ended March 31, 2017

Difference

Controllable Costs

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

DepreciationMaintenanceProperty Taxes and InsuranceIndirect MaterialsUtilitiesIndirect LaborSupervisory Salaries

$

$

$

FavorableUnfavorableNeither Favorable nor Unfavorable

DepreciationIndirect MaterialsIndirect LaborMaintenanceUtilitiesSupervisory SalariesProperty Taxes and Insurance

FavorableUnfavorableNeither Favorable nor Unfavorable

Property Taxes and InsuranceDepreciationMaintenanceIndirect LaborSupervisory SalariesIndirect MaterialsUtilities

FavorableUnfavorableNeither Favorable nor Unfavorable

Indirect LaborProperty Taxes and InsuranceSupervisory SalariesUtilitiesIndirect MaterialsDepreciationMaintenance

FavorableUnfavorableNeither Favorable nor Unfavorable

UtilitiesDepreciationIndirect MaterialsProperty Taxes and InsuranceIndirect LaborMaintenanceSupervisory Salaries

FavorableUnfavorableNeither Favorable nor Unfavorable

$

$

$

FavorableUnfavorableNeither Favorable nor Unfavorable

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Explanation / Answer

Manufacturing overhead flexible budget report budget Actual Differecne Variable costs indirect materials 11,500 14,500 3,000 U indirect labor 11,000 9,200 1,800 F Utilities 7,500 9,100 1,600 U Maintenance 5,900 5,300 600 F total variable cost 35,900 38,100 2,200 U fixed expense Supervisory salaries 36,900 36,900 0 N Depreciation 7,100 7,100 0 N property taxes and insurance 8,000 8,800 800 F Maintenance 5,000 5,000 0 N total fixed expense 57,000 57,800 800 N total expense 92,900 95,900 3,000 U controllable costs Budget Actual Differecne indirect materials 11,500 14,500 3,000 U indirect labor 11,000 9,200 1,800 F Utilities 7,500 9,100 1,600 U Maintenance 10,900 10,300 600 F Supervisory salaries 36,900 36,900 0 N total 77,800 80,000 2,200 U

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