Chapter 5, Problem 19E

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Cariman contracts delivery drivers to service customers. Cariman owns the vans and pays for the gas. With reference to the following independent situations for Cariman, determine where (a) responsibility and (b) controllability lie. Suggest what might be done to solve the problem or to improve the situation: (20 marks)a) In the manufacturing plant the production manager is not happy with the material that the purchasing manager has been purchasing. In May the production manager stops requesting materials from the supply warehouse, and starts purchasing them directly from a different materials supplier. Actual materials costs in May are higher than budgeted.b) Overhead costs in the manufacturing plant for June are much higher than budgeted. Investigation reveals a utility rate hike in effect that was not figured into the budget.

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General accounting question

The Snape Corporation has the following data for 2014: Selling price per unit $10 Variable costs per unit $6 Fixed costs Units sold $20,000 12,000 Snape's 2014 operating leverage is: a) 0.50 b) 2.00 c) 4.00 d) 1.71

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