Kirk Company uses a responsibility reporting system. It has divisions in San Francisco, Phoenix, and Tulsa. Each
Question:
Kirk Company uses a responsibility reporting system. It has divisions in San Francisco, Phoenix, and Tulsa. Each division has three production departments: Cutting, Shaping, and Finishing. The responsibility for each department rests with a manager who reports to the division production manager. Each division manager reports to the vice president of production. There are also vice presidents for marketing and finance. All vice presidents report to the president.
In January 2011, controllable actual and budget manufacturing overhead cost data for the departments and divisions were as shown below.
Additional overhead costs were incurred as follows: Phoenix division production manager—actual costs $73,100, budget $70,000; vice president of production—actual costs $72,000, budget $70,000; president—actual costs $94,200, budget $91,300. These expenses are not allocated.
Instructions
(a) Using the format on page 451, prepare the following responsibility reports.
(1) Manufacturing overhead—Cutting Department manager—Phoenix division.
(2) Manufacturing overhead—Phoenix division manager.
(3) Manufacturing overhead—vice president of production.
(4) Manufacturing overhead and expenses—president.
(b) Comment on the comparative performances of:
(1) Department managers in the Phoenix division.
(2) Division managers.
(3) Vice presidents.
Step by Step Answer:
Managerial Accounting Tools for business decision making
ISBN: 978-0470477144
5th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso