Reference no: EM132768350

Question - 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 $16.30 q

Indirect labor $4,400 + $1.50 q

Utilities $5,600 + $0.80 q

Supplies $1,500 + $0.40 q

Equipment depreciation $18,000 + $2.40 q

Factory rent $8,400

Property taxes $3,000

Factory administration $13,700 + $0.90 q

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 -

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

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

3. Make the spending variances for all expense items.