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.

Manufacturing Overhead Individual costs-Cutting Department-Phoenix Actual Budget Indirect labor Indirect materials Maintenance Utilities Supervision 95,000 62,500 27,400 25,200 31,000 $241,100 $ 90,000 61,000 25,000 20,000 28,000 $224,000 Total costs Shaping Department-Phoenix Finishing Department-Phoenix San Francisco division Tulsa division $190,000 250,000 722,000 760,000 $177,000 246,000 715,000 750,000 Actual $167,200 124,000 Vice President Marketing Finance Budget $160,000 120,000