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.
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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 | ||||
ekkarill92 answered 2 years agoRelated 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 +...
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