Question

Arctica manufactures snowmobiles and ATVs. These products are made in different departments, and each department has its own manager. Each responsibility performance report only includes those costs that the particular department manager can control: raw materials, wages, supplies used, and equipment depreciation.

Snowmobile ATV Combined SnowmobileATV Combined
(Budget) (Budget) (Budget) (Actual) (Actual) (Actual)
Raw materials $19,990 $28,000 $47,990 $19,920 $29,320 $49,240
Employee wages10,900 21,000 31,900 11,210 21,740 32,950
Dept. manager 4,800 5,700 10,500 4,900 4,900 9,800
salary
Supplies used 3,850 1,400 5,250 3,670 1,420 5,090
Depreciation- Equip.6,500 13,000 19,500 6,500 13,000 19,500
Utilities 410 590 1,000 380 550 930
Rent 6,200 6,800 13,000 5,800 6,800 12,600
Totals $52,650 $76,490 $129,148 $52,380 $77,730$130,110
Prepare a responsibility accounting report for the snowmobile department.

Answer 1

Arctica

Snowmobile Department

Responsibility Accounting Report

Budget Actual Variance

Raw materials $19,990 $19,920 $70 Favorable

Employee wages 10,900 11,210 310 Unfavorable

Dept. manager 4,800 4,900 100 Unfavorable

Supplies used 3,850 3,670 180 Favorable

Depreciation- Equip. 6,500 6,500 0 0

Utilities 410 380 30 Favorable

Rent 6,200 5,800 400 Favorable

Totals $52,650 $52,380 $270 Favorable

Step-by-step explanation:

a) Data

Snowmobile ATV Combined Snowmobile ATV Combined

(Budget) (Budget) (Budget) (Actual) (Actual) (Actual)

Raw materials $19,990 $28,000 $47,990 $19,920 $29,320 $49,240

Employee wages 10,900 21,000 31,900 11,210 21,740 32,950

Dept. manager 4,800 5,700 10,500 4,900 4,900 9,800

salary

Supplies used 3,850 1,400 5,250 3,670 1,420 5,090

Depreciation- Equip.6,500 13,000 19,500 6,500 13,000 19,500

Utilities 410 590 1,000 380 550 930

Rent 6,200 6,800 13,000 5,800 6,800 12,600

Totals $52,650 $76,490 $129,148 $52,380 $77,730 $130,110

b) The responsibility accounting report is a performance report that presents a comparison of the actual and budgeted amounts of controllable costs for a department and its manager, showing the variances, and indicating whether each cost element is favorable or unfavorable.