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Question - Prepare a Responsibility Cost Report
A cost report for the Fair Division managed by Mr. Divina appears below:
Actual
Budget
Direct Materials
21,375
22,650
Supplies
5,550
4,800
Direct Labor
27,330
19,176
Employees' welfare
3,000
2,250
Taxes and insurance
4,000
Representation and entertainment
5,000
18,300
Postage, telephone and telegraph
4,275
Light and water
6,075
Repairs and maintenance
7,500
Supervision
12,000
Depreciation
15,000
18,000
Other allocated costs
9,000
9,750
The division manager has no authority over taxes and insurance, supervision, depreciation and other allocated costs. The cost of representation and entertainment tremendously increased during the period because he had to entertain a foreigner who visited his division to study a potential business transaction and that he did it for the benefit of the company as a whole.
The company's management hired you to prepare a responsibility report for the evaluation of the division manager during the period under review.
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