CHAPTER 24
Budgetary Control and Responsibility Accounting
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
1. Describe budgetary control
and static budget reports.
1, 2, 3, 4, 5
1, 2
1
2. Prepare flexible budget
reports.
6, 7, 8, 9, 10,
11, 12
3, 4, 5
2
3. Apply responsibility
13, 14, 15, 16,
17, 18, 19, 20,
3
10, 11, 13, 14,
15, 16
4A, 6A
4. Evaluate performance in
22, 23, 24
8, 9, 10
4
16, 17, 18, 19
5A
income.
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time
Allotted (min.)
1A
Prepare flexible budget and budget report for manufacturing
overhead.
Simple
20–30
2A
Prepare flexible budget, budget report, and graph for
manufacturing overhead.
30–40
3A
State total budgeted cost formula, and prepare flexible
budget reports for two time periods.
Simple
20–30
Prepare responsibility report for a profit center.
and compute ROI.
accounting, and comment on performance of managers.
Compare ROI and residual income.
BLOOM’ S TAXONOMY TABLE
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of–Chapter Exercises and Problems
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
1. Describe budgetary control
and static budget reports.
E24-1
Q24-1
Q24-2
Q24-3
Q24-4
Q24-5
BE24-1
BE24-2
DI24-1
E24-2
P24–3A
E24-8
E24-9
4. Evaluate performance in
investment centers.
Q24–22
Q24–23
Q24–24
BE24-8
BE24-9
BE24–10
DI24-4
E24–16
E24–17
E24–18
E24–19
P24–5A
residual income.
Q24–12
Q24-7
Q24-8
Q24–10
BE24-4
DI24-2
E24–10
E24–11
E24–12
E24-4
E24-8
ANSWERS TO QUESTIONS
4. There is no justification for Ken’s concern. The sales budget is derived from the sales forecast
Questions Chapter 24 (Continued)
18. There are three types of responsibility centers:
Questions Chapter 24 (Continued)
22. The primary basis for evaluating the performance of the manager of an investment center is
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 24-1
CROIX COMPANY
Sales Budget Report
For the Quarter Ended March 31, 2017
BRIEF EXERCISE 24-2
CROIX COMPANY
Sales Budget Report
For the Quarter Ended June 30, 2017
BRIEF EXERCISE 24-3
(a) ROONEY COMPANY
Static Direct Labor Budget Report
For the Month Ended January 31, 2017
BRIEF EXERCISE 24-3 (Continued)
BRIEF EXERCISE 24-4
GUNDY COMPANY
Monthly Flexible Manufacturing Budget
For the Year 2017
BRIEF EXERCISE 24-5
GUNDY COMPANY
Manufacturing Flexible Budget Report
For the Month Ended March 31, 2017
BRIEF EXERCISE 24-6
HANNON COMPANY
Assembly Department
Manufacturing Overhead Cost Responsibility Report
For the Month Ended April 30, 2017
BRIEF EXERCISE 24-7
TORRES COMPANY
Water Division
Responsibility Report
For the Year Ended December 31, 2017
BRIEF EXERCISE 24-8
COBB COMPANY
Plastics Division
Responsibility Report
For the Year Ended December 31, 2017
BRIEF EXERCISE 24-9
BRIEF EXERCISE 24–10
*BRIEF EXERCISE 24–11
*BRIEF EXERCISE 24–12
SOLUTIONS FOR DO IT! EXERCISES
DO IT! 24-1
Difference
Favorable F
Unfavorable U
Budget
Actual
DO IT! 24-2
Production in units
Variable costs
Fixed costs
Total costs
DO IT! 24-3
ROCKIES DIVISION
Responsibility Report
For the Year Ended December 31, 2017
DO IT! 24-4
(a) Controllable margin for 2017:
DO IT! 24-4 (Continued)
Controllable margin for alternative 2:
SOLUTIONS TO EXERCISES
EXERCISE 24-1
EXERCISE 24-2
(a) CREDE COMPANY
Selling Expense Report
For the Quarter Ending March 31
EXERCISE 24-3
MYERS COMPANY
Monthly Manufacturing Overhead Flexible Budget
For the Year 2017
EXERCISE 24-4
(a) MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
EXERCISE 24-4 (Continued)
(b) MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
EXERCISE 24-5
FALLON COMPANY
Monthly Selling Expense Flexible Budget
For the Year 2017
EXERCISE 24-6
(a) FALLON COMPANY
Selling Expense Flexible Budget Report
For the Month Ended March 31, 2017
EXERCISE 24-6 (Continued)
(b) FALLON COMPANY
Selling Expense Flexible Budget Report
For the Month Ended March 31, 2017
EXERCISE 24-7
(a) APPLIANCE POSSIBLE INC.
Flexible Production Cost Budget
EXERCISE 24-8
(a) RENSING GROOMERS
Flexible Budget
EXERCISE 24-9
(a) SORIA COMPANY
Selling Expense Flexible Budget Report
Clothing Department
For the Month Ended October 31, 2017
EXERCISE 24–10
(a) CHUBBS INC.
Manufacturing Overhead Flexible Budget Report
For the Quarter Ended March 31, 2017
(b) CHUBBS INC.
Manufacturing Overhead Responsibility Report
For the Quarter Ended March 31, 2017
EXERCISE 24–11
(a) URLINK COMPANY
Home Internet Services Segment
Responsibility Report
For the Quarter Ended March 31, 2017
(b)
MEMO
TO: Lenny Kirkland
FROM: Student
SUBJECT: The Reporting Principles of Performance Reports
EXERCISE 24–12
EXERCISE 24–13
(b)
To Assembly Plant Manager—Dallas Month: July
(c)
To Vice President—Production Month: July
Controllable Costs:
EXERCISE 24–14
(a) MALONE COMPANY
Mixing Department
Responsibility Report
For the Month Ended January 31, 2017
EXERCISE 24–15
EXERCISE 24-15 (Continued)
(b) HORATIO INC.
Women’s Shoe Division
Responsibility Report
For the Month Ended June 30, 2017
EXERCISE 24–16
(a) HARRINGTON COMPANY
Sports Equipment Division
Responsibility Report
2017
EXERCISE 24–17
EXERCISE 24–18
(a) DINKLE AND FRIZELL DENTAL CLINIC
Preventive Services
Responsibility Report
For the Month Ended May 31, 2017
EXERCISE 24-18 (Continued)
(b)
MEMO
TO: Drs. Reese Dinkle and Anita Frizell
FROM: Student
SUBJECT: Deficiencies in the Current Responsibility Reporting System
EXERCISE 24–19
Planes:
EXERCISE 24-19 (Continued)
*EXERCISE 24–20
*EXERCISE 24-20 (Continued)
*EXERCISE 24–21
SOLUTIONS TO PROBLEMS
PROBLEM 24–1A
(a) BUMBLEBEE COMPANY
Packaging Department
Monthly Manufacturing Overhead Flexible Budget
For the Year 2017
PROBLEM 24-1A (Continued)
(b) BUMBLEBEE COMPANY
Packaging Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended October 31, 2017
PROBLEM 24–2A
(a) ZELMER COMPANY
Monthly Manufacturing Overhead Flexible Budget
Ironing Department
For the Year 2017
PROBLEM 24-2A (Continued)
(b) ZELMER COMPANY
Ironing Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended June 30, 2017
PROBLEM 24-2A (Continued)
PROBLEM 24–3A
(b) RATCHET COMPANY
Assembling Department
Flexible Budget Report
For the Month Ended August 31, 2017
PROBLEM 24-3A (Continued)
(c) RATCHET COMPANY
Assembling Department
Flexible Budget Report
For the Month Ended September 30, 2017
PROBLEM 24–4A
(a) CLARKE INC.
Patio Furniture Division
Responsibility Report
For the Year Ended December 31, 2017
PROBLEM 24–5A
(a) OPTIMUS COMPANY
Home Division
Responsibility Report
For the Year Ended December 31, 2017
(in thousands of dollars)
PROBLEM 24-5A (Continued)
PROBLEM 24–6A
(a) No. 1
To Cutting Department Manager—Seattle Division Month: January
No. 3
To Vice President—Production Month: January
Controllable Costs:
Controllable Costs:
Fav/Unfav
To Division Production Manager—Seattle Month: January
Controllable Costs:
PROBLEM 24-6A (Continued)
No. 4
To President Month: January
Controllable Costs:
*PROBLEM 24–7A
CD24 CURRENT DESIGNS
(a) Current Designs
Rotomolded Line
Manufacturing Budget
For the Year Ended December 31, 2017
CD24 (Continued)
(b) Current Designs
Rotomolded Line
Manufacturing Flexible Budget Report
For the Quarter Ended March 31, 2017
CD24 (Continued)
(c) Current Designs
Rotomolded Line
Manufacturing Flexible Budget Report
For the Quarter Ended March 31, 2017
BYP 24-1 DECISION-MAKING ACROSS THE ORGANIZATION
BYP 24-1 (Continued)
(b) GREEN PASTURES
Income Statement
Flexible Budget Report
For the Year Ended December 31, 2017
BYP 24-1 (Continued)
BYP 24-2 MANAGERIAL ANALYSIS
BYP 24-2 (Continued)
BYP 24-3 REAL-WORLD FOCUS
BYP 24-4 REAL-WORLD FOCUS
BYP 24-5 COMMUNICATION ACTIVITY
(c) FLEMING COMPANY
Production Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended
BYP 24-5 (Continued)
FLEMING COMPANY
Production Department
Manufacturing Overhead Responsibility Report
For the Month Ended
BYP 24-5 (Continued)
BYP 24-6 ETHICS CASE
(a) The stakeholders in this ethical situation are:
BYP 24-7 ALL ABOUT YOU
BYP 24-8 CONSIDERING YOUR COSTS AND BENEFITS