1. Packaging Solutions Corporation manufactures and sells a widevariety of packaging products. Performance reports are preparedmonthly for each department. The planning budget and flexiblebudget for the Production Department are based on the followingformulas, where q is the number of labor-hours worked in amonth:

	Cost Formulas
Direct labor	$16.60q
Indirect labor	$4,300 + $1.50q
Utilities	$5,200 + $0.30q
Supplies	$1,400 + $0.30q
Equipment depreciation	$18,700 + $2.60q
Factory rent	$8,100
Property taxes	$2,500
Factory administration	$13,800 + $0.90q

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

	Actual Cost Incurred in March
Direct labor	$	68,040
Indirect labor	$	9,780
Utilities	$	6,850
Supplies	$	2,870
Equipment depreciation	$	29,100
Factory rent	$	8,500
Property taxes	$	2,500
Factory administration	$	16,810

Required:

1. Prepare the Production Department’s planning budget for themonth.

2. Prepare the Production Department’s flexible budget for themonth.

3. Prepare the Production Department’s flexible budgetperformance report for March, including both the spending andactivity variances.

2. Ray Company provided the following excerpts from itsProduction Department’s flexible budget performance report.(Round "rate per hour" answers to 2 decimal places.Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Input all amounts as positive values.)

3. Alyeski Tours operates day tours of coastal glaciers inAlaska on its tour boat the Blue Glacier. Management has identifiedtwo cost drivers—the number of cruises and the number ofpassengers—that it uses in its budgeting and performance reports.The company publishes a schedule of day cruises that it maysupplement with special sailings if there is sufficient demand. Upto 86 passengers can be accommodated on the tour boat. Dataconcerning the company’s cost formulas appear below:

	Fixed Cost per Month			Cost per Cruise			Cost per Passenger
Vessel operating costs	$	6,700		$	478.00		$	3.40
Advertising	$	2,700
Administrative costs	$	5,500		$	35.00		$	1.50
Insurance	$	3,100

For example, vessel operating costs should be $6,700 per monthplus $478.00 per cruise plus $3.40 per passenger. The company’ssales should average $29.00 per passenger. In July, the companyprovided 57 cruises for a total of 3,100 passengers.

Required:

Prepare the company’s flexible budget for July.