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Durham Company 2014

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Durham 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 2014, controllable actual and budget manufacturing overhead cost data
for the departments and divisions were as shown below

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

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

a) Complete the following responsibility reports
(1) Manufacturing overhead—Cutting Department manager—Seattle division.
(2) Manufacturing overhead—Seattle division manager.
(3) Manufacturing overhead—vice president of production.
(4) Manufacturing overhead and expenses—president.

b) Rank the comparative performances of:
(1) Department managers in the Seattle division.
(2) Division managers.
(3) Vice presidents.

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