Required: 1. Prepare the Production Department's planning budget for the month. 2. Prepare the Production Department's flexible budget for the month. 3. Calculate the spending variances for all expense items.
Required: 1. Prepare the Production Department's planning budget for the month. 2. Prepare the Production Department's flexible budget for the month. 3. Calculate the spending variances for all expense items.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 9-16 Flexible Budgets in a Cost Center (LO9-1, LO9-2]
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
Cont Formulan
$16.50q
$4,300 + $1.50g
$5,100 + $0.70g
$1,600 + $0.40g
$18,400 + $2.40g
$8,400
$2,800
$13,300 + $0.50g
The Production Department planned to work 4,500 labor-hours in March; however, It actually worked 4,300 labor-
hours during the month, Its actual costs incurred in March are listed below:
Actual Cost Incurred in March
$ 72,570
$10,230
$ 8,640
$ 3,610
$ 28,720
$ 8,800
$ 2,800
$ 14,780
Direct labor
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
Required:
1. Prepare the Production Department's planning budget for the month.
2. Prepare the Production Department's flexible budget for the month.
3. Calculate the spending variances for all expense items.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F217af487-2bd5-4c3c-9135-0f568fa5de33%2F72e588f1-21af-46aa-ba6d-882dc87d2d93%2Fwjbfmy_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 9-16 Flexible Budgets in a Cost Center (LO9-1, LO9-2]
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
Cont Formulan
$16.50q
$4,300 + $1.50g
$5,100 + $0.70g
$1,600 + $0.40g
$18,400 + $2.40g
$8,400
$2,800
$13,300 + $0.50g
The Production Department planned to work 4,500 labor-hours in March; however, It actually worked 4,300 labor-
hours during the month, Its actual costs incurred in March are listed below:
Actual Cost Incurred in March
$ 72,570
$10,230
$ 8,640
$ 3,610
$ 28,720
$ 8,800
$ 2,800
$ 14,780
Direct labor
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
Required:
1. Prepare the Production Department's planning budget for the month.
2. Prepare the Production Department's flexible budget for the month.
3. Calculate the spending variances for all expense items.
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