Data concerning manufacturing overhead for Wilson Audio are presented below. The packaging department is a...
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Accounting
Data concerning manufacturing overhead for Wilson Audio are presented below. The packaging department is a cost centre.
An analysis of the overhead costs reveals that all variable costs are controllable by the manager of the packaging department, and, out of fixed costs, only 40% of supervisory costs are controllable at the department level. The flexible budget values and the cost and activity for the month of August while operating at 1,600 direct labour hours follows:
Flexible Budget Actual August Activity
Variable costs:
Indirect materials $2.00 $ 3,000
Indirect labour 3.00 4,500
Factory supplies 0.50 750
Fixed (including controllable and non-controllable) costs:
Depreciation $14,000 15,000
Supervision 20,000 19,000
Property taxes 14,000 12,000
Total costs $56,800 $54,250
Instructions
a) Prepare the responsibility reports for the packaging department for August. 12 marks
b) Comment on the manager's performance in controlling costs during the month. 3 marks
Answer & Explanation
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