Packaging Solutions Corporation manufactures and sells a wide variety of packagi

Question

Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor-hours worked in a month Coat Formulas $16.40q Direct labor Indirect labor utilities Supplies Equipment depreciation Factory rent $4,300 $1.40g $5, 300+ $o.50q $1,600 + $0.10q $18,500+ $2.60q $8,200 $2,900 $13, 800+ $0.70q Property taxes Pactory administration The Production Department planned to work 4,100 labor-hours in March; however, it actually worked 3,900 labor-hours during the month. Its actual costs incurred in March are listed below Direct labor Indirect labor utilities Supplies Equipment depreciation Factory rent Property taxes Factory adminiatration Actual Cost Incurred in March S 65, 560 $ 9,220 S 7,740 S 2,220 $28,640 5 8,600 2,900 s 15,900 Required: 1. Prepare the Production Department's planning budget for the month. 2. Prepare the Production Department's flexible budget for the month. 3. Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances.

Explanation / Answer

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Planning Budget Direct Labor 16.40*4100 67240 Indirect Labor 1.40*4100+4300 10040 Utilities .50*4100+5300 7350 Supplies .10*4100+1600 2010 Equipment Depreciation 2.60*4100+18500 29160 Factory Rent 8200 Property rent 2900 Factory Administration .70*4100+13800 16670 Total Expense 143570

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