Billie Whitehorse, the plant manager of Travel Free’s Indiana plant, is responsible for all of that plant’s costs other than her own salary. The plant has two operating departments and one service department. The camper and trailer operating departments manufacture different products and have their own managers. The office department, which Whitehorse also manages, provides services equally to the two operating departments. A budget is prepared for each operating department and the office department. The company’s responsibility accounting system must assemble information to present budgeted and actual costs in performance reports for each operating department manager and the plant manager. Each performance report includes only those costs that a particular operating department manager can control: raw materials, wages, supplies used, and equipment depreciation. The plant manager is responsible for the department managers’ salaries, utilities, building rent, office salaries other than her own, and other office costs plus all costs controlled by the two operating department managers. The annual departmental budgets and actual costs for the two operating departments follow. Budget Actual
Campers Trailers Combined Campers Trailers Combined
Raw materials $ 196,100 $ 276,800 $ 472,900 $ 194,300 $ 274,400 $ 468,700
Employee wages 105,700 205,800 311,500 107,200 207,400 314,600
Dept. manager salary 44,000 52,700 96,700 44,800 53,900 98,700
Supplies used 34,200 91,000 125,200 32,600 91,900 124,500
Depreciation—Equip. 61,500 126,000 187,500 60,600 126,500 187,100
Utilities 4,600 6,200 10,800 4,500 5,600 10,100
Building rent 6,900 10,000 16,900 6,100 9,300 15,400
Office department costs 69,750 69,750 139,500 68,550 68,550 137,100
Totals $ 522,750 $ 838,250 $ 1,361,000 $ 518,650 $ 837,550 $ 1,356,200
The office department’s annual budget and its actual costs follow.
Budget Actual
Plant manager salary $ 84,000 $ 85,000
Other office salaries 40,500 25,300
Other office costs 15,000 26,800
Totals $ 139,500 $ 137,100
Required:
1. Prepare responsibility accounting performance reports that list costs controlled by the following. In each report, include the budgeted and actual costs and show the amount that each actual cost is over or under the budgeted amount.
a. Manager of the camper department.
b. Manager of the trailer department.
c. Manager of the Indiana plant.