Prepare a Responsibility Cost Report

A cost report for the Fair Division managed by Mr. Divina appears below:

ActualBudget

Direct Materials 21,37522,650

Supplies5,5504,800

Direct Labor27,33019,176

Employees'welfare 3,0002,250

Taxes and insurance4,0004,000

Representation and entertainment5,00018,300

Postage, telephone and telegraph2,2504,275

Light and water4,8006,075

Repairs and maintenance7,5007,500

Supervision12,00012,000

Depreciation15,00018,000

Other allocated costs9,0009,750

The division manager has no authority over taxes and insurance, supervision, depreciation and other allocated costs.The cost of representation and entertainment tremendously increased during the period because he had to entertain a foreigner who visited his division to study a potential business transaction and that he did it for the benefit of the company as a whole.

The company's management hired you to prepare a responsibility report for the evaluation of the division manager during the period under review.