Question:
Britney Brown, the plant manager of LMN Co. s Chicago plant, is responsible for all of that plants costs other than her 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 Brown 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 her 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 24.2 that list costs con-trolled 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 materials Employee wages70.000 Dept. manager salary..55,000 Supplies used..5,000 Depreciation-Equip. 53,000 $400,000 $200,000 600,000 $385,000 $202000 587,000 81,500 256.200 101,500 23,700 90,000 55,200 82,300 Office department costs70,50070.500000 75,000 75,000 50,000 $856,500 $480,500$1,337,000 $857,000 $488,900 $1.345,900 80,000 49.000 9,000 37,000 18,000 7,000 250,000 104,000 24,000 90,000 48,000 80,000 174.700 55,000 14.000 53,000 46,500 9,700 37.000 30,000 ..63,000 34500 2000 Building rent . 65,800 16,500 Budget Actual Plant manager salary.80.000 85,000 40,000 35,200 Other office salarieS....4 Other office costs. 21000 29.800 29.800 $141.000 $150.000