Packaging Solutions Corporation manufactures and sells a wide variety of packagi
ID: 2548663 • 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 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:
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.
Cost Formulas Direct labor $16.10q Indirect labor $4,200 + $1.50q Utilities $5,100 + $0.70q Supplies $1,700 + $0.40q Equipment depreciation $18,300 + $2.60q Factory rent $8,000 Property taxes $2,800 Factory administration $13,400 + $0.70qExplanation / Answer
Particulars Cost formula Actual Revenue and spending variance Flexible budget Activity variance Static budget Labor hours 3900 3900 4100 Direct labor 16.10q 64330 1540 U 62790 3220 F 66010 Indirect labor 4200+1.5q 9530 520 F 10050 300 F 10350 utilities 5100+.7q 8360 530 U 7830 140 F 7970 Supplies 1700+.4q 3550 290 U 3260 80 F 3340 equipment depreciation 18300+2.6q 28440 0 28440 520 F 28960 Factory rent 8000 8400 100 U 8000 0 8000 Property taxes 2800 2800 0 2800 0 2800 Factory administration 13400+.7q 15500 630 F 16130 140 F 16270 Total expense 140910 1610 U 139300 4400 F 143700
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.