The manufacturing overhead budget for Huang Sunglasses contains the following items.

The budget was based on an estimated 2,000 units being produced. During the past month, 1,500 units were produced, and the following costs incurred.

Instructions

a. Determine which items would be controllable by Jun Chen, the production manager.

b. How much should have been spent during the month for the manufacture of the 1,500 units?

c. Prepare a fl exible manufacturing overhead budget report for Mr. Chen.

d. Prepare a responsibility report. Include only the costs that would have been controllable by Mr. Chen’s. Assume that the supervision cost above includes Mr. Chen’s salary of HK$100,000, both at budget and actual. In an attached memo, describe clearly for Mr. Chen the areas in which his performance needs to be improved.

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Fixed costs Supervision Inspection costs Insurance expense Depreciation Variable costs Indirect materials Indirect labor Maintenance expense Manufacturing supplies HK$220,000 HK$170,000 120,000 10,000 20,000 100,000 60,000 150,000 HK$350,000 Total variable HK$500,000 Total fixed Variable costs Fixed costs Supervision Inspection costs Indirect materials HK$225,000 135,000 HK$184,000 Indirect labor 12,000 22,000 Maintenance expense 82,000 Insurance expense Manufacturing supplies 50,000 Depreciation 147,000 Total variable HK$492,000 Total fixed HK$365,000