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Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly...

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Accounting

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$16.30q
Indirect labor$4,200 + $1.50q
Utilities$5,100 + $0.60q
Supplies$1,200 + $0.10q
Equipment depreciation$18,600 + $2.50q
Factory rent$8,400
Property taxes$2,600
Factory administration$13,300 + $0.70q

The Production Department planned to work 4,500 labor-hours inMarch; however, it actually worked 4,300 labor-hours during themonth. Its actual costs incurred in March are listed below:

Actual Cost Incurred in March
Direct labor$71,670
Indirect labor$10,130
Utilities$8,190
Supplies$1,860
Equipment depreciation$29,350
Factory rent$8,800
Property taxes$2,600
Factory administration$15,680

Required:

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

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

3. Calculate the spending variances for all expense items.

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