Question 9-18A Performance report and evaluation Vance Corporation has four divisions; the assembly division, the processing division, the machining division, and the packing division. All four divisions are under the control of the vice president of manufacturing. Each division has a manager and several from vice president to division manager to supervisor. The processing division is composed of the paint and finishing departments. The May responsibility reports for the supervisors of these departments follow. Required a. Prepare a responsibility report for the manager of the processing division. b. Prepare a responsibility report for the vice president of manufacturing. c. Explain where the $6,300 unfavorable labor variance in the paint department supervisor?s report is included in the vice president?s report. d. Based on the responsibility report prepared in Requirement a, explain where the processing division manager should concentrate his attention.

Student Name: Class: Problem 09-18A VANCE CORPORATION Responsibility Report Processing Division Manager For the Month Ended May 31 Controllable Costs: Paint Department Finishing Department Other Costs Total Budget Actual Variances VANCE CORPORATION Responsibility Report Vice President of Manufacturing For the Month Ended May 31 Controllable Costs: Assembly Division Processing Division Machining Division Packing Division Other Costs Total Budget Actual Variances Given Data P09-18A: VANCE CORPORATION Responsibility Reports Paint Department Controllable costs: Raw materials Labor Repairs Maintenance Total Finishing Department Controllable costs: Raw materials Labor Repairs Maintenance Total Cost data of other divisions: Assembly Machine Packing Other Costs Associated with: Processing Division Manager Vice President of Manufacturing Budgeted Actual Variance $30,800 57,700 4,800 2,600 $95,900 $31,700 64,000 3,870 2,460 $102,030 $900 6,300 930 140 $6,130 Unfavorable Unfavorable Favorable Favorable Unfavorable $22,810 43,300 2,830 1,680 $70,620 $22,560 39,900 3,170 2,050 $67,680 $250 3,400 340 370 $2,940 Favorable Favorable Unfavorable Unfavorable Favorable Budgeted $330,000 290,000 414,950 Actual $324,300 296,400 405,700 220,000 128,000 217,800 133,060 Student Name: Class: Problem 09-21A SOTO CORPORATION a. Margin b. Turnover c. ROI d1. ROI d2. ROI d3. ROI Given Data P09-21A: SOTO CORPORATION Capital invested in operating assets Earned income 2011 Sales Part d.: (1) Actual sales (1) Actual operating income (2) Actual sales (2) Actual operating income (3) Invested capital $300,000 45,000 600,000 750,000 60,000 600,000 48,000 240,000 Student Name: Class: Problem 09-18A VANCE CORPORATION Responsibility Report Processing Division Manager For the Month Ended May 31 Controllable Costs: Paint Department Finishing Department Other Costs Total Budget Actual Variances VANCE CORPORATION Responsibility Report Vice President of Manufacturing For the Month Ended May 31 Controllable Costs: Assembly Division Processing Division Machining Division Packing Division Other Costs Total Budget Actual Variances Given Data P09-18A: VANCE CORPORATION Responsibility Reports Paint Department Controllable costs: Raw materials Labor Repairs Maintenance Total Finishing Department Controllable costs: Raw materials Labor Repairs Maintenance Total Cost data of other divisions: Assembly Machine Packing Other Costs Associated with: Processing Division Manager Vice President of Manufacturing Budgeted Actual Variance $30,800 57,700 4,800 2,600 $95,900 $31,700 64,000 3,870 2,460 $102,030 $900 6,300 930 140 $6,130 Unfavorable Unfavorable Favorable Favorable Unfavorable $22,810 43,300 2,830 1,680 $70,620 $22,560 39,900 3,170 2,050 $67,680 $250 3,400 340 370 $2,940 Favorable Favorable Unfavorable Unfavorable Favorable Budgeted $330,000 290,000 414,950 Actual $324,300 296,400 405,700 220,000 128,000 217,800 133,060 Student Name: Class: Problem 09-21A SOTO CORPORATION a. Margin b. Turnover c. ROI d1. ROI d2. ROI d3. ROI Given Data P09-21A: SOTO CORPORATION Capital invested in operating assets Earned income 2011 Sales Part d.: (1) Actual sales (1) Actual operating income (2) Actual sales (2) Actual operating income (3) Invested capital $300,000 45,000 600,000 750,000 60,000 600,000 48,000 240,000 Answer: Q3 The unfavourable labour variance of 6300 is included in the PROCESSING DIVISION cost in vice president's report Q4 Based on the responsibility statement it can be seen that there is UNFAVORABLE variance in case of painting department where the actual costs are more than the budgeted cost. In case of painting department the actual labour and raw material cost is more than the budgeted cost. Hence, from the responsibility statement it appears that the processing division manager should focus more on controlling the PAINTING department labour and raw material cost. Student Name: Class: Problem 09-18A VANCE CORPORATION Responsibility Report Processing Division Manager For the Month Ended May 31 Controllable Costs: Paint Department Finishing Department Other Costs Total Budget $95,900 70,620 220,000 $386,520 Correct! Actual $102,030 67,680 217,800 $387,510 Correct! Variances $6,130 Unfavorable 2,940 Favorable 2,200 Favorable $990 Correct! VANCE CORPORATION Responsibility Report Vice President of Manufacturing For the Month Ended May 31 Controllable Costs: Assembly Division Processing Division Machining Division Packing Division Other Costs Total Budget $330,000 386,520 290,000 414,950 128,000 $1,549,470 Correct! Actual $324,300 387,510 296,400 405,700 133,060 $1,546,970 Correct! Variances $5,700 990 6,400 9,250 5,060 $2,500 Correct! Favorable Unfavorable Unfavorable Favorable Unfavorable Given Data P09-18A: VANCE CORPORATION Responsibility Reports Paint Department Controllable costs: Raw materials Labor Repairs Maintenance Total Finishing Department Controllable costs: Raw materials Labor Repairs Maintenance Total Cost data of other divisions: Assembly Machine Packing Other Costs Associated with: Processing Division Manager Vice President of Manufacturing Budgeted Actual Variance $30,800 57,700 4,800 2,600 $95,900 $31,700 64,000 3,870 2,460 $102,030 $900 6,300 930 140 $6,130 Unfavorable Unfavorable Favorable Favorable Unfavorable $22,810 43,300 2,830 1,680 $70,620 $22,560 39,900 3,170 2,050 $67,680 $250 3,400 340 370 $2,940 Favorable Favorable Unfavorable Unfavorable Favorable Budgeted $330,000 290,000 414,950 Actual $324,300 296,400 405,700 220,000 128,000 217,800 133,060 Student Name: Class: Problem 09-21A SOTO CORPORATION a. Margin b. Turnover c. ROI d1. ROI d2. ROI d3. ROI 7.5% Correct! 0.15 Correct! 20.0% Correct! 16.0% Correct! 18.75% Correct! Given Data P09-21A: SOTO CORPORATION Capital invested in operating assets Earned income 2011 Sales Part d.: (1) Actual sales (1) Actual operating income (2) Actual sales (2) Actual operating income (3) Invested capital $300,000 45,000 600,000 750,000 60,000 600,000 48,000 240,000