Chubbs Inc.’s manufacturing overhead budget for the first quarter of 2017 contai

Question

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

Variable Costs

Fixed Costs

Actual variable costs were indirect materials $15,000, indirect labor $9,200, utilities $9,900, and maintenance $4,600. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $9,200. 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.)

CHUBBS INC.
Manufacturing Overhead Flexible Budget Report
For the Quarter Ended March 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

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

CHUBBS INC.
Manufacturing Overhead Responsibility Report
For the Quarter Ended March 31, 2017

Difference

Controllable Costs

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

Variable Costs

Fixed Costs

Indirect materials $11,500 Supervisory salaries $36,700 Indirect labor 10,900 Depreciation 6,600 Utilities 7,300 Property taxes and insurance 7,900 Maintenance 5,700 Maintenance 4,200

Explanation / Answer

ans a Manufacturing oVerhead Budget Budget Actual Variance A-B Variable cost Indirect materials $11,500 $15,000 $3,500 Unfavorable Indirect labor 10,900 9200 500 Favorable Utilities 7,300 9900 $2,600 Unfavorable Maintenance 5,700 4600 1,100 Favorable Total variable cost V $35,400 $38,700 $3,300 Unfavorable Fixed Costs Supervisory salaries $36,700 $36,700 $0 Neither favorable not unfavorable Depreciation 6,600 $6,600 $0 Neither favorable not unfavorable Property taxes and insurance 7,900 9200 $1,300 Unfavorable Maintenance 4,200 $4,200 $0 Neither favorable not unfavorable Total fixed cost F $55,400 $56,700 $1,300 Unfavorable Total cost V+F $90,800 $95,400 $4,600 Unfavorable ans b Controllable cost Budget Actual Variable cost Indirect materials $11,500 $15,000 $3,500 Unfavorable Indirect labor $10,900 $9,200 $500 Favorable Utilities $7,300 $9,900 $2,600 Unfavorable Maintenance $5,700 $4,600 $1,100 Favorable Total variable cost V $35,400 $38,700 $3,300 Unfavorable If any doubt please comment

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