Reference no: EM132527677

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 : $16.20q

Indirect labor : $4,600 + $1.50q

Utilities : $5,200 + $0.60q

Supplies : $1,500 + $0.30q

Equipment depreciation : $18,800 + $2.90q

Factory rent : $8,300

Property taxes : $2,800

Factory administration : $13,200 + $0.60q

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

Direct labor : $69,600

Indirect labor : $10,380

Utilities : $8,230

Supplies : $3,030

Equipment depreciation : $30,980

Factory rent : $8,700

Property taxes : $2,800

Factory administration : $15,070

Required:

Question 1. Prepare the Production Department's planning budget for the month.

Question 2. Prepare the Production Department's flexible budget for the month.

Question 3. Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances.