Tilg 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 re- ports 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 2002, controllable actual and budget manufacturing overhead cost data for the departments and divisions were as follows.

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 $64,000; president-actual costs \($76,400\), Budget \($74,200\). These expenses are not allocated. The vice presidents who report to the president, other than the vice president of production, had the following expenses.

Instructions

(a) Using the format on page 286, prepare the following responsibility reports.

(1) Manufacturing overhead-Cutting Department manager-Seattle division.

(2) Manufacturing overhead Seattle division manager.

(3) Manufacturing overhead-vice president of production.

(4) Manufacturing overhead and expenses-president.

b) Comment on the comparative performances of:

(1) Department managers in the Seattle division.

2) Division managers.

(3) Vice presidents.

Transcribed Image Text:

Manufacturing Overhead Individual costs-Cutting Department-Seattle Indirect labor Indirect materials Maintenance Utilities Supervision Total costs Shaping Department-Seattle Finishing Department-Seattle Denver division San Diego division Actual Budget $ 73,000 $ 70,000 46,700 46,000 20,500 18,000 20,100 17,000 31,000 30,000 $ 191,300 $ 181,000 $ 158,000 210,000 676,000 $ 148,000 208,000 673,000 722,000 715,000 $1,766,000 $1,744,000