The following budget for August, 2020 was reported for the MAINTENANCE DEPARTMENT of YESYES Manufacturing Company: YESYES
Question:
The following budget for August, 2020 was reported for the MAINTENANCE DEPARTMENT of YESYES Manufacturing Company:
YESYES MANUFACTURING COMPANY
Maintenance Department
Cost Budget for August 2020
Salaries and wages P20,000
Supplies 10,000
Communications 5,000
Light and water 3,000
Depreciation expense - tools and equipment 8,000
Total Budgeted cost 46,000
During August, the maintenance department incurred a total cost of P50,000, composed of salaries and wages; P 25,000; supplies, P8,000; communications, P3,000, light and water, P3,000 and depreciation, P11,000.
Salaries ang wages expense includes P5,000 representing the department manager's own salary. The manager does not have the control of hiring of personnel in his department. Salaries of all staff in the department are set with the use of the company's standard salary scheme for all employees.
The manager can influence the incurrence of communication and supplies. The department does not have its own meter to measure consumption of light and water. The cost is computed for the whole factory and allocated to all the departments concerned.
Acquisition and disposal of tools, equipments and other fixed assets are subject to approval by higher levels of management. Determination of useful life and depreciation method is covered by the company's depreciation policy.
Required: Prepare responsibility cost report for the maintenancedepartment.
Accounting Principles
ISBN: 978-1119419617
IFRS global edition
Authors: Paul D Kimmel, Donald E Kieso Jerry J Weygandt