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. Snowmobile ATV Combined SnowmobileATV Combined
(Budget) (Budget) (Budget) (Actual) (Actual) (Actual)
Raw materials $19,990 $28,000 $47,990 $19,920 $29,320 $49,240
Employee wages10,900 21,000 31,900 11,210 21,740 32,950
Dept. manager 4,800 5,700 10,500 4,900 4,900 9,800
salary
Supplies used 3,850 1,400 5,250 3,670 1,420 5,090
Depreciation- Equip.6,500 13,000 19,500 6,500 13,000 19,500
Utilities 410 590 1,000 380 550 930
Rent 6,200 6,800 13,000 5,800 6,800 12,600
Totals $52,650 $76,490 $129,148 $52,380 $77,730$130,110
Prepare a responsibility accounting report for the snowmobile department.

Responsibility Accounting Report

                                       Budget         Actual           Variance

Raw materials               $19,990      $19,920            $70   Favorable

Employee wages            10,900          11,210             310   Unfavorable

Dept. manager                 4,800          4,900             100   Unfavorable

Supplies used                  3,850          3,670              180   Favorable

Depreciation- Equip.       6,500          6,500                 0      0

Utilities                                 410             380               30   Favorable

Rent                                 6,200         5,800              400  Favorable

Totals                         $52,650      $52,380           $270  Favorable

Explanation:

a) Data

                             Snowmobile   ATV     Combined Snowmobile ATV Combined

                             (Budget)  (Budget)  (Budget)   (Actual) (Actual) (Actual)

Raw materials     $19,990  $28,000   $47,990  $19,920 $29,320 $49,240

Employee wages  10,900    21,000       31,900      11,210     21,740   32,950

Dept. manager       4,800      5,700       10,500     4,900      4,900     9,800

salary

Supplies used        3,850       1,400        5,250      3,670      1,420     5,090

Depreciation- Equip.6,500  13,000      19,500      6,500    13,000   19,500

Utilities                       410         590         1,000         380        550        930

Rent                       6,200      6,800       13,000     5,800      6,800   12,600

Totals                $52,650 $76,490    $129,148 $52,380  $77,730 $130,110

b) The responsibility accounting report is a performance report that presents a comparison of the  actual and budgeted amounts of controllable costs for a department and its manager, showing the variances, and indicating whether each cost element is favorable or unfavorable.

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