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:     Cost Formulas Direct labor $16.40q Indirect labor $4,400 + $1.80q Utilities $5,300 + $0.50q Supplies $1,200 + $0.30q Equipment depreciation $18,500 + $2.50q Factory rent $8,200 Property taxes $2,700 Factory administration $13,700 + $0.60q     The Production Department planned to work 4,300 labor-hours in March; however, it actually worked 4,100 labor-hours during the month. Its actual costs incurred in March are listed below:     Actual Cost Incurred in March Direct labor $ 68,840   Indirect labor $ 11,320   Utilities $ 7,840   Supplies $ 2,700   Equipment depreciation $ 28,750   Factory rent $ 8,600   Property taxes $ 2,700   Factory administration $ 15,510       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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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:

 

  Cost Formulas
Direct labor $16.40q
Indirect labor $4,400 + $1.80q
Utilities $5,300 + $0.50q
Supplies $1,200 + $0.30q
Equipment depreciation $18,500 + $2.50q
Factory rent $8,200
Property taxes $2,700
Factory administration $13,700 + $0.60q
 

 

The Production Department planned to work 4,300 labor-hours in March; however, it actually worked 4,100 labor-hours during the month. Its actual costs incurred in March are listed below:

 

  Actual Cost Incurred in March
Direct labor $ 68,840  
Indirect labor $ 11,320  
Utilities $ 7,840  
Supplies $ 2,700  
Equipment depreciation $ 28,750  
Factory rent $ 8,600  
Property taxes $ 2,700  
Factory administration $ 15,510  
 

 

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.

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