Question: Kanjak Company uses a responsibility reporting
Kanjak Company uses a responsibility reporting system. It has divisions in Calgary, Winnipeg, and Sudbury. Each division has three production departments: cutting, shaping, and finishing. Responsibility for each department belongs to a manager who reports to the division production manager. Each division manager reports to the vice-president of production.
There are also vice-presidents for marketing and finance. All vice-presidents report to the president.
Prepare reports for cost centres under responsibility accounting, and comment on the performance of managers.
In January 2020, controllable budgeted and actual manufacturing overhead costs for the departments and divisions were as follows:
Additional overhead costs were incurred as follows: Winnipeg division production manager—actual costs $73,100, budgeted $70,000; vice-president of production—actual costs $73,000, budgeted $70,000; president—actual costs $96,200, budgeted $91,300. These expenses are not allocated.
The vice-presidents, other than the vice-president of production, had the following expenses:
Instructions
a. Using the format in Illustration 11.21, prepare the following responsibility reports:
1. Manufacturing overhead—cutting department manager—Winnipeg division
2. Manufacturing overhead—Winnipeg division manager
3. Manufacturing overhead—vice-president of production
4. Manufacturing overhead and expenses—president
b. Comment on the comparative performances of
(1) the department managers in the Winnipeg division,
(2) the division managers, and
(3) the vice-presidents.
Transcribed Image Text:
Manufacturing Overhead Actual Budget Individual costs-cutting department-Winnipeg Indirect labour $ 95,000 $ 90,000 Indirect materials 62,000 61,000 Maintenance 27,400 25,000 Utilities 25,200 20,000 Supervision 30,000 28,000 $239,600 $224,000 Total costs $190,000 $177,000| Shaping department–Winnipeg Finishing department-Winnipeg 249,000 246,000 Calgary division 722,000 715,000 Sudbury division 760,000 750,000 Actual Budget Marketing $167,200 $160,000 Finance 124,000 120,000
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