Compute production department planning budget for month

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Reference no: EM132749976

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$16.30q

Indirect labor$4,400 + $1.50q

Utilities$5,600 + $0.80q

Supplies$1,500 + $0.40q

Equipment depreciation$18,000 + $2.40q

Factory rent$8,400

Property taxes$3,000

Factory administration$13,700 + $0.90q

The Production Department planned to work 4,200 labor-hours in March; however, it actually worked 4,000 labor-hours during the month. Its actual costs incurred in March are listed below:

Actual Cost Incurred in March

Direct labor$66,780

Indirect labor$9,880

Utilities$9,350

Supplies$3,390

Equipment depreciation$27,600

Factory rent$8,800

Property taxes$3,000

Factory administration$16,710

Required:

Problem 1. the Production Department's planning budget for the month.

Problem 2. the Production Department's flexible budget for the month.

Problem 3. the spending variances for all expense items.

Reference no: EM132749976

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