Accounting Help…

An analysis of the overhead costs reveals that all variable costs are controllable by the manager of the Mixing Department and the 50% of the supervisory costs are controllable at the department level.

The flexible budget formula and the cost and activity for the months of July and August are as follows:

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Flexible Budget Per
Direct Labor Hour Actual Costs Actual Costs
July August

Direct labor hours 6,000 7,000
Overhead costs
Indirect materials $3.50 $20,500 $25,100
Indirect labor 6.00 39,500 40,700
Factory supplies 1.00 9,600 8,200
Depreciation $20,000 15,000 15,000
Supervision 20,000 18,000 20,900
Property taxes 5,000 12,000 12,000
Total costs $114,500 $121,900

(a) Prepare the responsibility reports for the Mixing Department for each month.

(b) Comment on the manager’s performance in controlling costs during the two month period.

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