Question

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 2020, controllable actual and budget manufacturing overhead cost data for the departments and divisions were as shown below.

Manufacturing Overhead		Actual		Budget
Individual costs—Cutting Department—Seattle
Indirect labor		$73,000		$69,700
Indirect materials		48,200		45,800
Maintenance		20,700		17,800
Utilities		20,100		16,800
Supervision		22,400		19,900
		$184,400		$170,000

Total costs
Shaping Department—Seattle		$157,700		$148,000
Finishing Department—Seattle		210,000		203,600
Denver division		678,300		672,700
San Diego division		721,900		715,000

Additional overhead costs were incurred as follows: Seattle division production manager—actual costs $52,500, budget $51,000; vice president of production—actual costs $65,000, budget $63,500; president—actual costs $76,700, budget $74,300. These expenses are not allocated.

The vice presidents who report to the president, other than the vice president of production, had the following expenses.

Vice President		Actual		Budget
Marketing		$133,200		$129,700
Finance		109,300		104,900

Prepare the Manufacturing overhead—Cutting Department manager—Seattle division responsibility report.

To Cutting Department Manager—Seattle Division							Month: January
Controllable Costs:		Budget		Actual		Favorable Unfavorable Neither Favorable nor Unfavorable
Direct LaborDirect MaterialsIndirect LaborIndirect MaterialsMaintenancePresidentSeattle Division Production ManagerSupervisionUtilitiesVice President of ProductionCuttingShapingFinishingSeattleDenverSan DiegoPrductionMarketingFinance		$		$		$	Neither Favorable nor UnfavorableFavorableUnfavorable
Direct LaborDirect MaterialsIndirect LaborIndirect MaterialsMaintenancePresidentSeattle Division Production ManagerSupervisionUtilitiesVice President of ProductionCuttingShapingFinishingSeattleDenverSan DiegoPrductionMarketingFinance							Neither Favorable nor UnfavorableUnfavorableFavorable
Direct LaborDirect MaterialsIndirect LaborIndirect MaterialsMaintenancePresidentSeattle Division Production ManagerSupervisionUtilitiesVice President of ProductionCuttingShapingFinishingSeattleDenverSan DiegoPrductionMarketingFinance							FavorableNeither Favorable nor UnfavorableUnfavorable
Direct LaborDirect MaterialsIndirect LaborIndirect MaterialsMaintenancePresidentSeattle Division Production ManagerSupervisionUtilitiesVice President of ProductionCuttingShapingFinishingSeattleDenverSan DiegoPrductionMarketingFinance							Neither Favorable nor UnfavorableFavorableUnfavorable
Direct LaborDirect MaterialsIndirect LaborIndirect MaterialsMaintenancePresidentSeattle Division Production ManagerSupervisionUtilitiesVice President of ProductionCuttingShapingFinishingSeattleDenverSan DiegoPrductionMarketingFinance							FavorableUnfavorableNeither Favorable nor Unfavorable
Total		$		$		$	Neither Favorable nor UnfavorableFavorableUnfavorable

Answer 1