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	$16.10q
Indirect labor	$4,400 + $1.60q
Utilities	$5,400 + $0.50q
Supplies	$1,500 + $0.30q
Equipment depreciation	$18,200 + $2.80q
Factory rent	$8,400
Property taxes	$2,600
Factory administration	$13,500 + $0.90q

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	$	69,160
Indirect labor	$	10,620
Utilities	$	7,990
Supplies	$	3,030
Equipment depreciation	$	29,960
Factory rent	$	8,800
Property taxes	$	2,600
Factory administration	$	16,690

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.

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

	Packaging Solutions Corporation Production Department Planning Budget For the Month Ended March 31 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense

Prepare the Production Department’s flexible budget for the mont

	Packaging Solutions Corporation Production Department Flexible Budget For the Month Ended March 31 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense

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 4,200 Direct labor $69,160 Indirect labor 10,620 Utilities 7,990 Supplies 3,030 Equipment depreciation 29,960 Factory rent 8,800 Property taxes 2,600 Factory administration 16,690 Total expense $148,850

Answer 1