Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 22, Problem 22.3CP
Static budget for a service company
A bank manager of City Savings Bank Inc. uses the
| Resources | Budget | Actual |
| Salaries | $200,000 | $200,000 |
| Benefits | 30.000 | 30,000 |
| Supplies | 45,000 | 42,000 |
| Travel | 20,000 | 30,000 |
| Training | 25,000 | 35,000 |
| Overtime | 25,000 | 20,000 |
| Total | $345,000 | $357,000 |
| Excess of actual over budget | $ 12,000 |
- a. What information is provided by the budget? Specifically, what questions can the bank manager ask of the Operations Department manager?
- b. What information does the static budget fail to provide? Specifically, could the budget information be presented differently to provide even more insight for the bank manager?
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Required information
Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing
Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan
Department. The usage of the two service departments' output for the year is as follows:
User of Service
Provider of Service
HR
HR
Computing
Deposit
Loan
Computing
0
20%
10%
0
70%
20%
40%
40%
The budgeted costs in the two service departments for the year are as follows:
HR
Computing
$ 162,000
238,500
Required:
Use the step-down method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan
departments. Tuscaloosa National Bank allocates the costs of the HR Department first.
Note: Do not round intermediate calculations.
Subject: acounting
Chapter 22 Solutions
Accounting (Text Only)
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