Question

In: Accounting

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

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 $16.60q
Indirect labor $4,700 + $2.10q
Utilities $5,600 + $0.70q
Supplies $1,600 + $0.30q
Equipment depreciation $18,200 + $3.00q
Factory rent $8,600
Property taxes $2,600
Factory administration $13,400 + $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 $ 71,360
Indirect labor $ 13,120
Utilities $ 9,070
Supplies $ 3,130
Equipment depreciation $ 30,800
Factory rent $ 9,000
Property taxes $ 2,600
Factory administration $ 16,150

Required:

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

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

3. Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.

Solutions

Expert Solution

Planned Budget:
Direct labour (16.6*4400) 73040
Indirect labour (4700+2.10*4400) 13940
Utilities (5600+0.70*4400) 8680
Supplies (1600*0.3*4400) 2920
Equipment dep (18200+3*4400) 31400
factory rent 8600
Property taxes 2600
factory admin (13400+0.8*4400) 16920
Total cost 158100
Flexible Budget:
Direct labour (16.6*4200) 69720
Indirect labour (4700+2.10*4200) 13520
Utilities (5600+0.70*4200) 8540
Supplies (1600*0.3*4200) 2860
Equipment dep (18200+3*4200) 30800
factory rent 8600
Property taxes 2600
factory admin (13400+0.8*4200) 16760
Total cost 153400
Production Departmentt Flexible Budget report
Actual Spending variance Flexible Activity Variance Planned
Direct labour 71360 1640 Unfav 69720 3320 Unfav 73040
Indirect labour 13120 400 Fav 13520 420 Unfav 13940
Utilities 9070 530 Unfav 8540 140 Unfav 8680
Supplies 3130 270 Unfav 2860 60 Unfav 2920
Equipment dep 30800 0 30800 600 Unfav 31400
factory rent 9000 400 Unfav 8600 0 8600
Property taxes 2600 0 2600 0 2600
factory admin 16150 610 fav 16760 160 Unfav 16920
Total cost 155230 1830 153400 4700 Unfav 158100

Related Solutions

Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $16.30q Indirect labor $4,500 + $1.40q Utilities $5,400 + $0.60q Supplies $1,200 + $0.20q Equipment depreciation $18,300 + $2.90q Factory rent $8,100 Property taxes $2,400 Factory administration $13,000 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $16.30q Indirect labor $4,700 + $1.90q Utilities $5,300 + $0.40q Supplies $1,300 + $0.20q Equipment depreciation $18,500 + $2.70q Factory rent $8,500 Property taxes $2,700 Factory administration $13,300 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 + $1.40q Utilities $5,600 + $0.60q Supplies $1,600 + $0.30q Equipment depreciation $18,700 + $2.80q Factory rent $8,400 Property taxes $2,800 Factory administration $13,300 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $16.30q Indirect labor $4,700 + $1.40q Utilities $5,400 + $0.80q Supplies $1,800 + $0.30q Equipment depreciation $18,600 + $2.40q Factory rent $8,100 Property taxes $2,400 Factory administration $13,300 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $16.50q Indirect labor $4,200 + $1.40q Utilities $5,200 + $0.40q Supplies $1,300 + $0.10q Equipment depreciation $18,400 + $2.80q Factory rent $8,300 Property taxes $2,800 Factory administration $13,300 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $4,100 + $1.50q Utilities $5,000 + $0.30q Supplies $1,200 + $0.40q Equipment depreciation $18,600 + $2.40q Factory rent $8,000 Property taxes $2,500 Factory administration $13,300 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $4,400 + $1.70q Utilities $5,500 + $0.30q Supplies $1,800 + $0.40q Equipment depreciation $18,600 + $2.40q Factory rent $8,100 Property taxes $2,500 Factory administration $13,100 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $16.10q Indirect labor $4,100 + $2.00q Utilities $5,800 + $0.30q Supplies $1,700 + $0.30q Equipment depreciation $18,600 + $2.50q Factory rent $8,500 Property taxes $2,800 Factory administration $13,100 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $16.60q Indirect labor $4,600 + $1.60q Utilities $5,700 + $0.90q Supplies $1,200 + $0.20q Equipment depreciation $18,800 + $2.90q Factory rent $8,100 Property taxes $2,500 Factory administration $13,200 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $16.30q Indirect labor $4,500 + $1.60q Utilities $5,300 + $0.70q Supplies $1,200 + $0.10q Equipment depreciation $18,100 + $2.90q Factory rent $8,100 Property taxes $2,700 Factory administration $13,700 +...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT