In April, the vice president of sales of Petro Products asks the controller to prepare a responsibility
Question:
In April, the vice president of sales of Petro Products asks the controller to prepare a responsibility report for the performance evaluation of the manager of its Division Y, which is organized into Sections A and B.
The following cost items related to the operation of Division Y for the month of May, 19-- are presented by the controller:
ActualBudgeted
Item Cost Cost
Division Y costs:
Staff wages...............................................$20,000$18,500
Supplies.................................................6,0004,800
Manager's salary...........................................8,0006,400
Other expenses............................................ 15,000 13,400
Total Division Y cost........................................$ 49,000$ 43,100
Administration cost allocable to Division Y........................$17,000$14,500
Unit output—Division Y......................................10,00010,000
Section A costs:
Supervisor's salary—Section A.................................8,0009,500
Employees' wages—Section A:
Juracek..................................................2,0001,900
Molloy..................................................3,5003,600
Nienaber................................................3,3003,250
Oats..................................................4,1004,050
Peterson.................................................5,8005,650
Washington..............................................5,0005,000
Materials cost—Section A....................................4,5005,200
Indirect labor—Section A.....................................7,8007,300
Other overhead costs—Section A............................... 18,000 19,600
Total Section A costs........................................$62,000$65,050
Section B costs:
Supervisor's salary—Section B.................................$7,000$7,500
Employees' wages—Section B:
Laurie..................................................4,4004,350
Potash..................................................3,6003,800
Tillman..................................................2,1002,050
Other overhead costs—Section B............................... 15,000 14,500
Total Section B costs........................................$32,100$32,200
Required: Prepare a responsibility report for the month of May in a format suitable for evaluating the performance of Division Y's manager.
PROBLEM
5.Flexible Budget. At normal capacity, Boulder Products Corp. manufactures 10,000 trail bikes. At that level, unit variable costs for the Assembly Department are:
Direct materials.........................................................$30
Direct labor............................................................60
Indirect labor...........................................................30
Repairs and maintenance..................................................15
General factory expenses.................................................. 15
$................................................................. 150
Fixed expenses are $150,000 for indirect labor, $175,000 for repairs and maintenance, and $80,000 for general factory.
Required:
Prepare a flexible budget for the Assembly Department at 70%, 80%, 90%, and 100% of normal capacity.
