Problem 22-1A Responsibility accounting performance reports; controllable and budgeted costs LO P1 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. Budget Actual Campers Trailers Combined Campers Trailers Combined Raw materials $ 195,000 $ 275,000 $ 470,000 $ 194,200 $ 273,200 $ 467,400 Employee wages 104,000 205,000 309,000 106,600 206,400 313,000 Dept. manager salary 43,000 52,000 95,000 44,000 53,500 97,500 Supplies used 33,000 90,000 123,000 31,700 91,600 123,300 Depreciation—Equip. 60,000 125,000 185,000 60,000 125,000 185,000 Utilities 3,600 5,400 9,000 3,300 5,000 8,300 Building rent 5,700 9,300 15,000 5,300 8,700 14,000 Office department costs 68,750 68,750 137,500 67,550 67,550 135,100 Totals $ 513,050 $ 830,450 $ 1,343,500 $ 512,650 $ 830,950 $ 1,343,600 The office department’s annual budget and its actual costs follow. Budget Actual Plant manager salary $ 80,000 $ 82,000 Other office salaries 32,500 30,100 Other office costs 25,000 23,000 Totals $ 137,500 $ 135,100 Required: 1. Prepare responsibility accounting performance reports that list costs controlled by the following. a. Manager of the Camper department. b. Manager of the Trailer department. c. Manager of the Indiana plant.

Problem 22-1A Responsibility accounting performance reports; controllable and budgeted costs LO P1 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. Budget Actual Campers Trailers Combined Campers Trailers Combined Raw materials $ 195,000 $ 275,000 $ 470,000 $ 194,200 $ 273,200 $ 467,400 Employee wages 104,000 205,000 309,000 106,600 206,400 313,000 Dept. manager salary 43,000 52,000 95,000 44,000 53,500 97,500 Supplies used 33,000 90,000 123,000 31,700 91,600 123,300 Depreciation—Equip. 60,000 125,000 185,000 60,000 125,000 185,000 Utilities 3,600 5,400 9,000 3,300 5,000 8,300 Building rent 5,700 9,300 15,000 5,300 8,700 14,000 Office department costs 68,750 68,750 137,500 67,550 67,550 135,100 Totals $ 513,050 $ 830,450 $ 1,343,500 $ 512,650 $ 830,950 $ 1,343,600 The office department’s annual budget and its actual costs follow. Budget Actual Plant manager salary $ 80,000 $ 82,000 Other office salaries 32,500 30,100 Other office costs 25,000 23,000 Totals $ 137,500 $ 135,100 Required: 1. Prepare responsibility accounting performance reports that list costs controlled by the following. a. Manager of the Camper department. b. Manager of the Trailer department. c. Manager of the Indiana plant.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 22-1A Responsibility accounting performance reports; controllable and budgeted costs LO P1

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.

	Budget		Actual
	Campers	Trailers	Combined	Campers	Trailers	Combined
Raw materials	$	195,000		$	275,000		$	470,000	$	194,200	$	273,200	$	467,400
Employee wages		104,000			205,000			309,000		106,600		206,400		313,000
Dept. manager salary		43,000			52,000			95,000		44,000		53,500		97,500
Supplies used		33,000			90,000			123,000		31,700		91,600		123,300
Depreciation—Equip.		60,000			125,000			185,000		60,000		125,000		185,000
Utilities		3,600			5,400			9,000		3,300		5,000		8,300
Building rent		5,700			9,300			15,000		5,300		8,700		14,000
Office department costs		68,750			68,750			137,500		67,550		67,550		135,100
Totals	$	513,050		$	830,450		$	1,343,500	$	512,650	$	830,950	$	1,343,600

The office department’s annual budget and its actual costs follow.

	Budget	Actual
Plant manager salary	$	80,000	$	82,000
Other office salaries		32,500		30,100
Other office costs		25,000		23,000
Totals	$	137,500	$	135,100

Required:
1. Prepare responsibility accounting performance reports that list costs controlled by the following.
a. Manager of the Camper department.
b. Manager of the Trailer department.
c. Manager of the Indiana plant.

In each report, include the budgeted and actual costs and show the amount that each actual cost is over or under the budgeted amount.

### Educational Content: Responsibility Accounting for Managers

#### Reporting Task Overview

For this exercise, you are required to prepare specific responsibility accounting performance reports. Each report should detail controllable costs and include both budgeted and actual costs. Additionally, indicate whether the actual cost is over or under the budgeted amount.

#### Key Roles for Report Preparation:
- **Manager of the Camper Department**
- **Manager of the Trailer Department**
- **Manager of the Indiana Plant**

**Special Instructions:**
- Show over-budget amounts with no sign.
- Under-budget amounts should be highlighted with a minus sign (-).

#### Reporting Structure

Complete the task by using the tabs provided for different sections.

### Responsibility Accounting Performance Report Example

**Department:** Manager, Camper Department

**Time Period:** For the Year

| **Controllable Costs** | **Budgeted Amount** | **Actual Amount** | **Over (Under) Budget** |
|------------------------|---------------------|-------------------|-------------------------|
| | | | |
| | | | |
| | | | |
| | | | |
| **Totals** | | | |

**Instructions:**
1. Assess each controllable cost for the year.
2. Compare the budgeted amount with the actual amount.
3. Calculate the difference to determine over or under budget status.
4. Fill in each section accordingly.

This template aims to aid managers in evaluating departmental financial performance and making informed decisions.

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