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:

  

The actual costs incurred in March in the Production Department are listed below:

  

The company had budgeted for an activity level of 4,100 labor-hours in March. Complete the Production Department’s planning budget for the month.

The company actually worked 3,900 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.)

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

2) Flexible budget :

Packaging Solutions Corporation Production Department Planning Budget For the Month Ended March 31 Direct labor 66010 Indirect labor 10240 Utilities 8270 Supplies 2520 Equipment depreciation 29890 Factory rent 8400 Property taxes 2600 Factory administration 16380 Total expense 144310

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