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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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
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.
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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