During the second quarter of 2013, Waterways' B.C. plant had established the following static budget and overhead costs:
WATERWAYS CORPORATION-B.C. PLANT
Manufacturing Overhead Budget (Static)
For the quarter ended December 31, 2012
Budgeted production in units................................................84,500
Budgeted manufacturing overhead costs:
Variable costs:
Indirect materials............................................................$ 25,350
Indirect labour..................................................................42,250
Utilities..........................................................................38,025
Maintenance....................................................................21,125
Fixed costs:
Salaries........................................................................126,195
Depreciation....................................................................50,400
Property taxes...................................................................7,200
Insurance........................................................................3,600
Janitorial.........................................................................7,800
Total budgeted manufacturing overhead...............................$321,945
At the end of June 2013, the plant reported actual production of 88,325 units with the following actual costs:
__________________________________Actual manufacturing overhead costs
Indirect materials............................$ 25,350.............Depreciation............50,400
Indirect labour.................................42,250............Property taxes..............7,200
Utilities..........................................38,025.................Insurance..............3,600
Maintenance....................................21,125..................Janitorial.............7,953
Salaries.........................................123,459.................................................
Instructions
(a) Prepare a flexible overhead budget within the operating range of 75,000 and 90,000 units using increments of 5,000 units.
(b) Prepare a flexible budget report showing favourable and unfavourable variances in manufacturing overhead costs for the second quarter of 2013.
(c) Prepare a responsibility report for the manufacturing overhead for
(1) The plant manager and
(2) The production supervisor. Include in each report only those costs you believe are controllable.