Durham 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 2017, controllable actual and budget manufacturing overhead cost data for the departments and divisions were as shown below.

Additional overhead costs were incurred as ollows: 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 in Illustration 24-19 (page 1069), 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.

Transcribed Image Text:

Manufacturing Overhead Actual Budget Individual costs-Cutting Department-Seattle Indirect labor $ 73,000 $ 70,000 Indirect materials 47,900 20,500 20,100 22,000 46,000 18,000 Maintenance Utilities 17,000 20,000 Supervision $183,500 $171,000 Total costs Shaping Department-Seattle Finishing Department-Seattle Denver division $158,000 $148,000 210,000 678,000 722,000 205,000 673,000 715,000 San Diego division