Complete the following problems from the textbook in Excel or Word:

Problem 6-28

Responsibility, controllability, and stretch targets.Consider each of the following independent situations for Happy Tours, a company owned by Jason Haslett that sells motor coach tours to schools and other groups. Happy Tours owns a fleet of 10 motor coaches and employs 12 drivers, 1 maintenance technician, 3 sales representatives, and an office manager. Happy Tours pays for all fuel and maintenance on the coaches. Drivers are paid $0.50 per mile while in transit, plus $15 per hour while idle (time spent waiting while tour groups are visiting their destinations). The maintenance technician and office manager are both full-time salaried employees. The sales representatives work on straight commission.

• 1.When the office manager receives calls from potential customers, she is instructed to handle the contracts herself. Recently, however, the number of contracts written up by the office manager has declined. At the same time, one of the sales representatives has experienced a significant increase in contracts. The other two representatives believe that the office manager has been colluding with the third representative to send him the prospective customers.
• 2.One of the motor coach drivers seems to be reaching his destinations more quickly than any of the other drivers and is reporting longer idle time.
• 3.Fuel costs have increased significantly in recent months. Driving the motor coaches at 60 miles per hour on the highway consumes significantly less fuel than driving them at 65 miles per hour.
• 4.Regular preventive maintenance of the motor coaches has been proven to improve fuel efficiency and reduce overall operating costs by averting costly repairs. During busy months, however, it is difficult for the maintenance technician to complete all of the maintenance tasks within his 40-hour workweek.
• 5.Jason Haslett has read about stretch targets, and he believes that a change in the compensation structure of the sales representatives may improve sales. Rather than a straight commission of 10% of sales, he is considering a system where each representative is given a monthly goal of 50 contracts. If the goal is met, the representative is paid a 12% commission. If the goal is not met, the commission falls to 8%. Currently, each sales representative averages 45 contracts per month.

Required

For situations 1?4, discuss which employee has responsibility for the related costs and the extent to which costs are controllable and by whom. What are the risks or costs to the company? What can be done to solve the problem or improve the situation? For situation 5, describe the potential benefits and costs of establishing stretch targets.

Problem 8-33

Overhead variance, missing information.Consider the following two situations?cases A and B?independently. Data refer to operations for April 2014. For each situation, assume standard costing. Also assume the use of a flexible budget for control of variable and fixed manufacturing overhead based oi machine-hours.

Cases

A

B

(1)Fixed manufacturing overhead incurred

$84,920

$23,180

(2)Variable manufacturing overhead incurred

$120,400

?

(3)Denominator level in machine-hours

?

1,000

(4)Standard machine-hours allowed for actual output achieved

6,200

?

(5)Fixed manufacturing overhead (per standard machine-hour)

?

?

Flexible-Budget Data:

(6)Variable manufacturing overhead (per standard machine-hour)

?

$42.00

(7)Budgeted fixed manufacturing overhead

$88,200

$20,000

(8)Budgeted variable manufacturing overheada

?

?

(9)Total budgeted manufacturing overheada

?

?

Additional Data:

(10)Standard variable manufacturing overhead allocated

$124,000

?

(11)Standard fixed manufacturing overhead allocated

$86,800

?

(12)Production-volume variance

?

$4,000 F

(13)Variable manufacturing overhead spending variance

$5,000 F

$2,282 F

(14)Variable manufacturing overhead efficiency variance

?

$2,478 F

(15)Fixed manufacturing overhead spending variance

?

?

(16)Actual machine-hours used

?

?

aFor standard machine-hours allowed for actual output produced.

Required

Fill in the blanks under each case.[Hint:Prepare a worksheet similar to that inExhibit 8-4(page 304). Fill in the knowns and then solve for the unknowns.]

Attached is exhibit 8-4 to help with this question.

Exhibit 8-4 Columnar Presentation of Integrated Variance Analysis: Webb Company for April 2014a Cases A B (1) Fixed manufacturing overhead incurred $ 84,920 $23,180 (2) Variable manufacturing overhead incurred $120,40 0 (3) Denominator level in machine-hours 1,000 (4) Standard machine-hours allowed for actual output achieved 6,200 (5) Fixed manufacturing overhead (per standard machine-hour) Flexible-Budget Data: (6) Variable manufacturing overhead (per standard machinehour) (7) Budgeted fixed manufacturing overhead $ 88,200 $20,000 (8) Budgeted variable manufacturing overheada (9) Total budgeted manufacturing overheada (10) Standard variable manufacturing overhead allocated $124,00 0 (11) Standard fixed manufacturing overhead allocated $ 86,800 (12) Production-volume variance $ 4,000 F (13) Variable manufacturing overhead spending variance $ 5,000 F $ 2,282 F (14) Variable manufacturing overhead efficiency variance $ 2,478 F (15) Fixed manufacturing overhead spending variance (16) Actual machine-hours used $ 42.00 Additional Data: Problem 8-33 Overhead variance, missing information. Consider the following two situationscases A and Bindependently. Data refer to operations for April 2014. For each situation, assume standard costing. Also assume the use of a flexible budget for control of variable and fixed manufacturing overhead based oi machine-hours. a For standard machine-hours allowed for actual output produced. Required Fill in the blanks under each case. [Hint: Prepare a worksheet similar to that in Exhibit 8-4(page 304). Fill in the knowns and then solve for the unknowns.]