Packaging Solutions Corporation manufactures and sells a wide variety of packagi
ID: 2525426 • Letter: P
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:
The actual costs incurred in March in the Production Department are listed below:
The company had budgeted for an activity level of 4,000 labor-hours in March. Complete the Production Department’s planning budget for the month.
The company actually worked 3,800 labor-hours in March. Complete the Production Department’s flexible budget for the month.
Calculate the spending variances for all expense items. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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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:
Explanation / Answer
1 Planning budget Direct labor 65200 Indirect labor 10200 Utilities 8500 Supplies 2400 Equipment depreciation 30000 Factory rent 8100 Property taxes 2800 Factory administration 16700 Total expenses 143900 2 Flexible budget Direct labor 61940 Indirect labor 9920 Utilities 8340 Supplies 2340 Equipment depreciation 29440 Factory rent 8100 Property taxes 2800 Factory administration 16540 Total expenses 139420 3 Spending variances Direct labor 1580 U Indirect labor 540 F Utilities 550 U Supplies 270 U Equipment depreciation 0 None Factory rent 400 U Property taxes 0 None Factory administration 610 F Total expenses 1650 U
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