Question

Chubbs Inc.’s manufacturing overhead budget for the first quarter of 2017 contained the following data.

Variable Costs

Fixed Costs

Indirect materials $11,100 Supervisory salaries $36,700
Indirect labor 11,000 Depreciation 6,100
Utilities 7,700 Property taxes and insurance 7,400
Maintenance 5,500 Maintenance 4,900

Actual variable costs were indirect materials $14,800, indirect labor $9,200, utilities $9,300, and maintenance $5,200. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,400. The actual activity level equaled the budgeted level.

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

(a) Prepare a manufacturing overhead flexible budget report for the first quarter. (List variable costs before fixed costs.)


(b) Prepare a responsibility report for the first quarter.

Answer 1

Answer and Explanation:

a. The preparation manufacturing overhead flexible budget report is shown below:-

Manufacturing overhead flexible budget report

Budget Actual Favorable (unfavorable)

Variable costs

Indirect materials $11,100 $14,800 $3,700 U

Indirect labor $11,000 $9,200 $1,800 F

Utilities $7,700 $9,300 $1,600 U

Maintenance $5,500 $5,200 $300 F

Total variable cost $35,300 $38,500 $3,200 U

Fixed expense

Supervisory salaries $36,700 $36,700 0

Depreciation $6,100 $6,100 0

Property ,taxes $7,400 $8,400 $1,000 U

Maintenance $4,900 $4,900 0

total fixed expense $55,100 $56,100 $1,000 U

total controllable cost $90,400 $94,600 $4200 U

b. The preparation of Manufacturing overhead Responsibility report is shown below:-

Controllable costs Budget Actual Favorable(unfavorable)

Indirect materials $11,100 $14,800 $3,700 U

Indirect labor $11,000 $9,200 $1,800 F

Utilities $7,700 $9,300 $1,600 U

Maintenance $10,400 $10,100 $300 F

Supervisory salaries $36,700 $36,700 0

Total $76,900 $80,100 $3200 U