Quiz 5
1. As sales manager, Jimmy was given the following static budget report for selling expenses in
the Clothing Department of Gray Company for the month of November.
As a result of this budget report, Jimmy was called into the president’s office and
congratulated for his fine sales performance. He was reprimanded, however, for allowing his
costs to get out of control. Jimmy knew something was wrong with the performance report
that he had been given. Howeveer, he was not sure what to do, and comes to you for advice.
Question :
a. Prepare a budget report based on flexible budget data to help Jimmy.
b. Should Jimmy have been reprimanded ? Explain.
2. Krabby Inc.’s manufacturing overhead budget for the first quarter of 2018 contained the
following data.
Actual variable costs were indirect materials $13500, indirect labor $9500, utilities $8700,
and maintenance $5000. Actual fixed costs equaled budgeted costs except for property taxes
and insurance, which were $8300. The actual activity level equaled the budgeted level. All
costs are considered controllable by the production department manager except for
depreciation, and property taxes and insurance.
Question :
a. Prepare a manufacturing overhead flexible budget report for the first quarter.
b. Prepare a responsibility report for the first quarter.