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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration $16.60q $4,200 $1.80q $5,300$0.90q $1,300+$0.30q $18,600+$2.50q $8,300 $2,900 $13,2000.70q The actual costs incurred in March in the Production Department are listed below: Actual Cost Incurred in Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration March $68,040 $10,940 $ 9,470 $ 2,770 $28,600 $ 8,700 $ 2,900 $15,370

Explanation / Answer

1 Planning Budget Direct labor 69720 Indirect labor 11760 Utilities 9080 Supplies 2560 Equipment depreciation 29100 Factory rent 8300 Property taxes 2900 Factory administration 16140 Total expense 149560 2 Flexible Budget Direct labor 66400 Indirect labor 11400 Utilities 8900 Supplies 2500 Equipment depreciation 28600 Factory rent 8300 Property taxes 2900 Factory administration 16000 Total expense 145000 3 Spending variance Direct labor 1640 U Indirect labor 460 F Utilities 570 U Supplies 270 U Equipment depreciation 0 None Factory rent 400 U Property taxes 0 None Factory administration 630 F Total expense 1790 U

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