Britney Brown is the plant manager of GT Co.’s Chicago plant. The Refrigerator and Dishwasher operating departments manufacture products and have their own managers. The Office department, which Brown also manages, provides services equally to the two operating departments.

Each performance report includes only those costs that a particular operating department manager can control: direct materials, direct labor, supplies used, and utilities. The plant manager is responsible for the department managers’ salaries, building rent, office salaries other than her own, and other office costs plus all costs controlled by the two operating department managers.

The April departmental budgets and actual costs for the two operating departments follow.

The Office department’s budgeted and actual costs follow.

Required

1. Prepare responsibility accounting performance reports like those in Exhibit 24.2 that list costs controlled by the following.

a. Manager of Refrigerator department.

b. Manager of Dishwasher department.

c. Manager of Chicago plant.

Analysis Component

2. Did the plant manager or one of the operating department managers best control costs?

Exhibit 24.2

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Budgeted Actual For Month Ended April 30 Refrigerators Dishwashers Refrigerators Dishwashers Direct materials.... Direct labor...... Department manager salaries... Supplies used . Utilities ... $400,000 $200,000 $385,000 $202,000 170,000 80,000 174,700 81,500 55,000 49,000 55,000 46,500 15,000 9,000 14,000 9,700 30,000 18,000 34,500 20,700 Building rent...... 63,000 17,000 65,800 16,500 Office department costs... 70,500 70,500 75,000 75,000 Totals..... $803,500 $443,500 $804,000 $451,900