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Nieto 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 2010, controllable actual and budget manufacturing overhead cost data for the departments and divisions were as shown below.
Manufacturing Overhead
Actual
Budget
Individual costs—Cutting Department—Seattle
Indirect labor
$ 73,000
$ 70,000
Indirect materials
47,700
46,000
Maintenance
20,500
18,000
Utilities
20,100
17,000
Supervision
22,000
20,000
$183,300
$171,000
Total costs
Shaping Department—Seattle
$158,000
$148,000
Finishing Department—Seattle
210,000
206,000
Denver division
676,000
673,000
San Diego division
722,000
715,000
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 allocated.
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
105,000
Instructions
(a) Using the format on page 1076, prepare 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) Comment on the comparative performances of:
(1) Department managers in the Seattle division.
(2) Division managers.
(3) Vice presidents.

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