Reference no: EM132515543
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$16.40q
Indirect labor$4,400 + $1.80q
Utilities $5,300 + $0.60q
Supplies $1,500 + $0.30q
Equipment depreciation $18,600 + $3.10q
Factory rent $8,400
Property taxes $2,500
Factory administration$13,700 + $0.80q
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 $70,480
Indirect labor $11,500 Utilities $8,330
Supplies $3,030
Equipment depreciation $31,620
Factory rent $8,800
Property taxes $2,500
Factory administration $16,450
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.