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	$16.20q
Indirect labor	$4,000 + $2.00q
Utilities	$5,500 + $0.30q
Supplies	$1,600 + $0.20q
Equipment depreciation	$18,300 + $2.90q
Factory rent	$8,400
Property taxes	$2,900
Factory administration	$13,500 + $0.50q
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 $ 66,360 Indirect labor $ 11,580 Utilities $ 7,150 Supplies $ 2,650 Equipment depreciation $ 29,900 Factory rent $ 8,800 Property taxes $ 2,900 Factory administration $ 14,830 Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Packaging Solutions Corporation Production Department Flexible Budget Performance Report For the Month Ended March 31 Actual Results Flexible Budget Planning Budget Labor-hours 4,000 Direct labor $66,360 Indirect labor 11,580 Utilities 7,150 Supplies 2,650 Equipment depreciation 29,900 Factory rent 8,800 Property taxes 2,900 Factory administration 14,830 Total expense $144,170

Answer 1

Packaging solutions corporations
Production department flexible Budget performance report
For the month ended March 31
		Actual results	Revenue and Spending Variances		Flexible Budget	Activity Variance		Planning Budget
Labor - hours	q	4,000			4,000			4,200
Direct labor	$16.20 q	$    66,360	$ 1,560	U	$    64,800	$ 3,240	F	$    68,040
Indirect labor	[$4000 + ($2.00 X q)]	$    11,580	$      420	F	$    12,000	$      400	F	$    12,400
Utilities	[$5500+ ($0.30 X q)]	$      7,150	$      450	U	$      6,700	$        60	F	$      6,760
Supplies	[$1,600 + ($0.20 X q)]	$      2,650	$      250	U	$      2,400	$        40	F	$      2,440
Equipment depreciation	[$18,300 + ($2.90 X q)]	$    29,900	$         -	None	$    29,900	$      580	F	$    30,480
Factory Rent	$                               8,400	$      8,800	$      400	U	$      8,400	$         -	None	$      8,400
Property taxes	$                               2,900	$      2,900	$         -	None	$      2,900	$         -	None	$      2,900
Factory administration	[$13,500 + ($.50 X q)]	$    14,830	$      670	F	$    15,500	$      100	F	$    15,600
Total expense		$1,44,170	$ 1,570	U	$1,42,600	$ 4,420	F	$1,47,020