Nieto Company uses a responsibility reporting system. It has divisions in Denver, Seattle, and San Diego. Each Division has three production departments: Cutting, Shaping, and Finishing. The responsibility for each department rests with 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.
In January 2022, controllable actual and budget manufacturing overhead cost data for the departments and divisions were as shown below:
Manufacturing Overhead Actual Budget
Individual cost – Cutting Department – Seattle
Indirect labor $ 73,000 $ 70,000
Indirect materials $ 47,900 $ 46,000
Maintenance $ 20,500 $ 18,000
Utilities $ 20,100 $ 17,000
Supervision $ 22,000 $ 20,000
$ 183,300 $ 171,000
Total Costs
Shaping Department – Seattle $ 158,000 $ 148,000
Finishing Department – Seattle $ 210,000 $ 205,000
Denver Division $ 678,000 $ 673,000
San Diego Division $ 722,000 $ 715,000
Additional overhead costs were incurred as follows: Seattle division production manager – actual costs $52,500, budget $51,000; vice president of production – actual costs $65,000 budget $64,000; president – actual costs $76,400, budget $74,200. These expenses are not allocated.
The vice presidents who report to the president, other than the vice president of production, had the following expenses:
Vice President Actual Budget
Marketing $ 133,600 $ 130,000
Finance $ 109,000 $ 104,000
Instructions: (Please show the computation)
Prepare the following responsibility reports:
Manufacturing overhead – Cutting Department manager – Seattle division
Manufacturing overhead – Seattle division manager
Manufacturing overhead – vice president of production
Manufacturing overhead and expenses – president