Question

Arctica manufactures snowmobiles and ATVs. These products are made in different departments, and each department has its own manager. Each responsibility performance report only includes those costs that the particular department manager can control: raw materials, wages, supplies used, and equipment depreciation. Using the data below, prepare a responsibility accounting report for the snowmobile department.

	Budget	Actual
	Snowmobile	ATV	Combined	Snowmobile	ATV	Combined
Raw material	\(19,500	\)27,500	\(47,000	\)19,420	\(28,820	\)48,240
Employee wages	10,400	20,500	30,900	10,660	21,240	31,900
Dept. manager salary	4,300	5,200	9,500	4,400	4,400	8,800
Supplies used	3,300	900	4,200	3,170	920	4,090
Depreciation – equipment	6,000	12,500	18,500	6,000	12,500	18,500
Utilities	360	540	900	330	500	830
Rent	5,700	6,300	12,000	5,300	6,300	11,600
Totals	\(49,560	\)73,440	\(123,000	\)49,280	\(74,680	\)123,960

Short answer

The responsibility report reflects that the total controllable cost is$50 higher than the budgeted cost.

Step-by-step solution

Definition of Responsibility Report

A responsibility report can be defined as a report reflecting the business entity’s performance by information about deviation in the budgeted controllable cost and actual controllable cost

Responsibility accounting report

Responsibility Accounting Report
Particular	Budget	Actual	Over (under) budget
Raw material	$19,500	$19,420	($80)
Employee wages	10,400	10,660	$260
Supplies used	3,300	3,170	($130)
Equipment depreciation	6,000	6,000	$0
Total	$39,200	$39,250	$50