Budget performance report for a cost center

GHT Tech Inc. sells electronics over the Internet. The Consumer Products Division is organized as a cost center. The budget for the Consumer Products Division for the month ended January 31 is as follows:

Customer service salaries	$546,840
Insurance and property taxes	114,660
Distribution salaries	872,340
Marketing salaries	1,028,370
Engineer salaries	836,850
Warehouse wages	586,110
Equipment depreciation	183,792
Total	$4,168,962

During January, the costs incurred in the Consumer Products Division were as follows:

Customer service salaries	$602,350
Insurance and property taxes	110,240
Distribution salaries	861,200
Marketing salaries	1,085,230
Engineer salaries	820,008
Warehouse wages	562,632
Equipment depreciation	183,610
Total	$4,225,270

Required:

1. Prepare a budget performance report for the director of the Consumer Products Division for the month of January. If an amount box does not require an entry, leave it blank.

GHT Tech Inc.
Budget Performance ReportDirector, Consumer Products Division
For the Month Ended January 31
	Actual	Budget	Over Budget	Under Budget
Customer service salaries	$	$	$	$
Insurance and property taxes
Distribution salaries
Marketing salaries
Engineer salaries
Warehouse wages
Equipment depreciation
Total	$	$	$	$

Feedback

1. Responsibility accounting for cost centers focuses on controlling and reporting of costs. Budget performance reports that report budgeted and actual costs are normally prepared for each cost center. The difference between budgeted and actual for each item is classified as either over budget or under budget. This type of report allows cost center mangers to focus on areas of significant differences.

2. For which costs might the director be expected to request supplemental reports?

1. Customer service salaries and marketing salaries as they are significantly over budget.

2. Customer service salaries, warehouse wages and marketing salaries as they have significantly changed.

3. Engineering salaries and warehouse wages as they are significantly under budget.