LEMS: P24-1A Bumblebee Company estimates that 300,000 direct labor hours will be worked during the coming year, 2017, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year. Fixed Overhead Costs Variable Overhead Costs Supervision $ 96,000 Indirect labor $126,000 Depreciation 72,000 Indirect materials 90,000 Insurance 30,000 Repairs 69,000 Rent 24,000 Utilities 72,000 Property taxes 18,000 Lubricants 18,000 $240,000 $375,000 It is estimated that direct labor hours worked each month will range from 27,000 to 36.000 hours. During October, 27,000 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: supervision $8,000, depreciation $6,000, insurance $2.460. rent $2.000, and property taxes $1.500. Variable overhead costs: indirect labor $12,432, indirect materials $7.680, repairs $6,100, utilities $6,840, and lubricants $1,920. Instructions (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31. 2017. (b) Prepare a flexible budget report for October (c) Comment on management's efficiency in controlling manufacturing overhead costs in October ility report P24-4A Clarke Inc. operates the Patio Furniture Division as a profit center. Operating data for this division for the year ended December 31, 2017. are as shown below. Difference Budget from Budget Sales $2,500,000 $50,000 F Cost of goods sold Variable 1,300,000 41,000 F Controllable fixed 200,000 3,000 U Selling and administrative Variable 220,000 6,000 Controllable fixed 50,000 2,000U Noncontrollable fixed costs 70,000 4,000U N In addition, Clarke incurs $180,000 of indirect fixed costs that were budgeted at $175,000. Twenty percent (20%) of these costs are allocated to the Patio Furniture Division Instructions (a) Prepare a responsibility report for the Patio Furniture Division for the year (b) Comment on the manager's performance in controlling revenues and costs. (c) Identify any costs excluded from the responsibility report and explain why they were excluded. Lion margin F able margin S T T ! Te Problems: Set P24-SA Optimus Company manufactures a variety of tools and industrial equipment. The Prepare responsibility company operates through three divisions. Each division is an investment center Operat for an investment ing data for the Home Division for the year ended December 31, 2017 and relevant budget and compte ROI. data are as follows (LO 4) Actual Comparison with Budget Sales $1,400,000 $100,000 favorable Variable cost of goods sold 665.000 45,000 unfavorable Variable selling and administrative expenses 125,000 25,000 unfavorable Controllable fixed cost of goods sold 170,000 On target Controllable fixed selling and administrative expenses 80,000 On target Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount Instructions (a) Prepare a responsibility report (in thousands of dollars) for the Home Division Controllable margine (b) Evaluate the manager's performance. Which items will likely be investigated by top Budget $330 management? Actual 360 (c) Compute the expected ROI in 2017 for the Home Division, assuming the following independent changes to actual data. (1) Variable cost of goods sold is decreased by (2) Average operating assets are decreased by 10%. (3) Sales are increased by $200,000, and this increase is expected to increase contri bution margin by $80.000 P24-6A Durham Company uses a responsibility reporting system. It has divisions in Derwer, Prepare reports for con Seattle, and San Diego. Each division has three production departments Cutting. Shaping. centes de por and Finishing. The responsibility for each department rests with a manager who reports accord cowww to the division production manager. Each division manager reports to the vice president performance of maps. of production. There are also vice presidents for marketing and finance. All vice presidents (LO) report to the president. In January 2017, 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 $ 70,000 Indirect materials 47.900 46,000 Maintenance 20,500 18.000 20,100 17,000 Supervision 22.000 20.000 SIR3,500 5171.000 Total costs Shaping Department-Sratile $158.000 $148.000 Finishing Department Seattle 210.000 205,000 Denver division 678,000 673.000 San Diego division 722.000 715.000 Additional overhead costs were incurred as ollows 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 we to the president, other than the vice president of production, had the following expenses Vice President Actual Marketing $133.600 $1.30,000 Finance 109,000 104,000 Instructions (a) Using the formatin Blustration 24-19 (page 1069).prepare the following responsibility (1) Manufacturing whead Cutting Department manager-Seattle division 112.500 (2) Manufacturing overhead-Seattle division manager