The following data pertain to the Overlook Inn for the month of August. The inn’s organization chart shows that the food and beverage department has the following subunits: banquets and catering, restaurants, and kitchen.

Flexible Budget: August Actual Results: August

(in thousands)* (in thousands)*

Banctictsianci@atenineeGei unnce act crecnm terer a te Sao NC a Distt alien niu men nam beli $)65y;

RROSTAUICUNLS Fae eters ta deen sobes. ganron. vas suite caagiian ce amauta crate spuaere i olO he Mrbedispeentra eoncpnee smak e: Wil95 KitCeEMIStat WAGES 2 rctsc cate yar estate ieesg cee eee (Ste) Renee on ena oes (86)

FROLIG Me cd gaaranbs vei eet bio aR ee rok meee mee ec Mee eme rTP me Ec (COO) bese create eee ae (690)

RADA KOGUCES Faster scecsciree de eam cnet tea caunen sete mae dome aatate (QUES) Ra certs te Ora ns sd (122)

Unit-level (variable) overhead in Kitchen ..........cccceeeee (SASH. Avetaenrs sae : (78)

Facility-level (fixed) overhead in kitchen .........cceen (QO) st Sard ohh cetera (93)

*Numbers without parentheses denote profit; numbers with parentheses denote expenses.

Required

a. Prepare an August performance report for Overlook Inn’s food and beverage department similar to the lower portion of Exhibit 18-4, which relates to Koala’s Production Department and Cutting Work Center. The report should have three numerical columns instead of six with headings analogous to those in Exhibit 18—4. (Your report will not have any year-to-date columns.) Your performance report should cover only the food and beverage department and the kitchen. Draw arrows to show the eselaee among the numbers in the report. Refer to Exhibit 18—4 for guidance.

ET. Build an Excel spreadsheet to complete requirement (a).

AS a group, prepare a report to the class regarding how a responsibility accounting system should handle each of the following scenarios:

a. Department A manufactures a component, which Department B then uses. Department A recently experienced a machine breakdown that held up production of the component. As a result, Department B was forced to curtail its own production, thereby incurring large costs of idle time.

An investigation revealed that Department A’s machinery had not been properly maintained.

b. Refer to the scenario in requirement (a), but suppose that the investigation revealed that the machinery in Department A had been properly maintained.