Rainbow Ltd's manufacturing overhead budget for the first quarter of the current year was prepared on the basis of planned output of 4,000 units and contained the following data:

Variable costs Fixed costs

Indirect materials $12,000 Supervisor salaries $36,000

Indirect labour 10,000 Depreciation 7,000

Utilities 8,000 Taxes and insurance 8,000

Maintenance 5,000 Maintenance 5,000

Actual variable costs were: indirect materials $13,800, indirect labour $9,600, utilities $8,700, and maintenance $4,200.

Actual fixed costs equalled budgeted fixed costs except for taxes and insurance which were $8,400.

Actual output for the quarter was 4,500 units.

All costs are considered controllable by the production department manager, except for depreciation, and taxes and insurance.

Requirements

(a) Prepare a flexible budget manufacturing overhead budget report for the quarter. (Marks 8)

(b) Which items from the budget report would be included in a responsibility report prepared for the production department manager? (Marks 2)