Litwin Company uses a responsibility reporting system. It has divisions in Denver, Seattle, and San Diego. 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: Seattle division production manager—actual costs $52,500, budget $51,000; vice president of production—actual costs $65,000, budget $64,000; president—actual costs $76,400, budget $74,200. These expenses are not allocated.

The vice presidents who report to the president, other than the vice president of production, had the following expenses.

Instructions

(a) Using the format on page 451, prepare the following responsibility reports.

(1) Manufacturing overhead—Cutting Department manager—Seattle division.

(2) Manufacturing overhead—Seattle 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 Seattle division.

(2) Division managers.

(3) Vice presidents.

Manufacturing Overhead Individual costs Cutting Department Seattle Actual Budget Indirect labor Indirect materials Maintenance Utilities Supervision 73,000 47,700 20,500 20,100 22,000 $183,300 $ 70,000 46,000 18,000 17,000 20,000 $171,000 Total costs Shaping Department-Seattle Finishing Department-Seattle Denver division San Diego division $158,000 210,000 676,000 722,000 $148,000 206,000 673,000 715,000 Actual $133,600 109,000 Budget $130,000 105,000 Vice President Marketing Finance