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

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Finance

Packaging SolutionsCorporation manufactures and sells a wide variety of packagingproducts. Performance reports are prepared monthly for eachdepartment. The planning budget and flexible budget for theProduction Department are based on the following formulas, whereq is the number of labor-hours worked in a month:
Cost Formulas
Direct labor $16.20q
Indirect labor $4,100 + $1.50q
Utilities $5,400 + $0.90q
Supplies $1,800 + $0.40q
Equipment depreciation $18,300 + $2.40q
Factory rent $8,100
Property taxes $2,400
Factory administration $13,500 + $0.60q
The ProductionDepartment planned to work 4,300 labor-hours in March; however, itactually worked 4,100 labor-hours during the month. Its actualcosts incurred in March are listed below:
Actual Cost Incurred in March
Direct labor $ 67,980
Indirectlabor $ 9,730
Utilities $ 9,660
Supplies $ 3,730
Equipmentdepreciation $ 28,140
Factoryrent $ 8,500
Propertytaxes $ 2,400
Factoryadministration $ 15,310
Required:
1. Prepare theProduction Department’s planning budget for the month.
2. Prepare theProduction Department’s flexible budget for the month.
3. Calculate thespending variances for all expense items

Answer & Explanation Solved by verified expert

3.8 Ratings (670 Votes)

1 Packaging Solutions Production Department Planning Budget For the month ended March 31 Number of Labor Hours 4300 Direct labor 4300 x 1620 69660 Indirect labor 4100 4300 x 150 10550 Utilities 5400 4300 x 090 9270 Supplies See Answer

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Packaging SolutionsCorporation manufactures and sells a wide variety of packagingproducts. Performance reports are prepared monthly for eachdepartment. The planning budget and flexible budget for theProduction Department are based on the following formulas, whereq is the number of labor-hours worked in a month:Cost FormulasDirect labor$16.20qIndirect labor$4,100 + $1.50qUtilities$5,400 + $0.90qSupplies$1,800 + $0.40qEquipment depreciation$18,300 + $2.40qFactory rent$8,100Property taxes$2,400Factory administration$13,500 + $0.60qThe ProductionDepartment planned to work 4,300 labor-hours in March; however, itactually worked 4,100 labor-hours during the month. Its actualcosts incurred in March are listed below:Actual Cost Incurred in MarchDirect labor$67,980Indirectlabor$9,730Utilities$9,660Supplies$3,730Equipmentdepreciation$28,140Factoryrent$8,500Propertytaxes$2,400Factoryadministration$15,310Required:1. Prepare theProduction Department’s planning budget for the month.2. Prepare theProduction Department’s flexible budget for the month.3. Calculate thespending variances for all expense items

	Cost Formulas
Direct labor	$16.20q
Indirect labor	$4,100 + $1.50q
Utilities	$5,400 + $0.90q
Supplies	$1,800 + $0.40q
Equipment depreciation	$18,300 + $2.40q
Factory rent	$8,100
Property taxes	$2,400
Factory administration	$13,500 + $0.60q

	Actual Cost Incurred in March
Direct labor	$	67,980
Indirectlabor	$	9,730
Utilities	$	9,660
Supplies	$	3,730
Equipmentdepreciation	$	28,140
Factoryrent	$	8,500
Propertytaxes	$	2,400
Factoryadministration	$	15,310