Question:
Aaron Braun, the plant manager of SOS Co.s Chicago plant, is responsible for all of that plants costs other than his own salary. The plant has two operating departments and one service department. The refrigerator and dishwasher operating departments manufacture different products and have their own managers. The office department, which Braun also manages, provides services equally to the two operating departments. A monthly budget is prepared for each operating department and the office department. The companys 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 his own, and other office costs plus all costs controlled by the two operating department managers. The April departmental budgets and actual costs for the two operating departments follow:
The office departments budget and its actual costs for April follow.
Required
1. Prepare responsibility accounting performance reports like those in Exhibit 21.28 that list costs controlled by the following:
a. Manager of the refrigerator department.
b. Manager of the dishwasher department.
c. Manager of the Chicago plant.
In each report, include the budgeted and actual costs for the month and show the amount by which each actual cost is over or under the budgeted amount.
Analysis Component
2. Did the plant manager or the operating department managers better manage costs?Explain.
Transcribed Image Text:
Budget Actual Refrigerators Dishwashers Combined Refrigerators Dishwashers Combined Raw materlals.... Employee wages Dept manager salary $400,000 $200,000 600,000 $375,000 $200,000 575,000 251,500 101,500 24,000 90,000 55,200 76,000 150,000 $858,500 $480,500 $1,339,000 $%842,200 $481,000 $1.323,200 72,000 Supples used.. ..15,000 53,000 30,000 63,000 70,500 Depreclation-Equip. Utilities.x.c..-*.... Building rent Office department costs.... Totals..aaana.$ 49,000 9.000 37.000 8,000 17000 70,500 0,000 252.000 104,000 24,000 90,000 48,000 80,000 141,000 174.700 55,000 4.000 53.000 34,500 61,000 75,000 76.800 46,500 10,000 37,000 20.700 15,000 75.000 Budget Actual Plant manager salary Other office salarles Other office costs Totals.. $ 80,000 85,000 40,000 35,200 21,000 29.800 $141,000 $150,000