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 Cost Formulas $16.300 $4,200 + $1.700 $5,400 + $0.600 $1,300+ $0.300 $18,300+ $2.88q $8,400 $3,000 $13,200 + $0.800 The Production Department planned to work 4,400 labor-hours in March; however, it actually worked 4,200 labor-hours during the month. Its actual costs incurred in March are listed below: Actual Cost Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Required: Incurred in March $ 70,040 $ 10,860 $ 8,430 $ 2,830 $ 30,060 $ 8,800 $ 3,000 $ 15,950 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
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 Cost Formulas $16.300 $4,200 + $1.700 $5,400 + $0.600 $1,300+ $0.300 $18,300+ $2.88q $8,400 $3,000 $13,200 + $0.800 The Production Department planned to work 4,400 labor-hours in March; however, it actually worked 4,200 labor-hours during the month. Its actual costs incurred in March are listed below: Actual Cost Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Required: Incurred in March $ 70,040 $ 10,860 $ 8,430 $ 2,830 $ 30,060 $ 8,800 $ 3,000 $ 15,950 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Cost Formulas
$16.300
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
$4,200 + $1.709
$5,400 + $0.609
$1,300+ $0.38q
$18,300 + $2.80q
$8,400
$3,000
$13,200 + $0.88q
The Production Department planned to work 4,400 labor-hours in March; however, it actually worked 4,200 labor-hours during the
month. Its actual costs incurred in March are listed below:
Actual Cost
Incurred in
March
$ 70,040
$ 10,860
$ 8,430
Direct labor
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
Required:
$ 2,830
$ 30,060
$ 8,800
$ 3,000
$ 15,950
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.
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