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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 $16.30q
Indirect labor $4,200 + $2.10q
Utilities $5,500 + $0.80q
Supplies $1,500 + $0.20q
Equipment depreciation $18,700 + $3.10q
Factory rent $8,200
Property taxes $2,800
Factory administration $13,100 + $0.60q

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 $ 70,040
Indirect labor $ 12,620
Utilities $ 9,410
Supplies $ 2,590
Equipment depreciation $ 31,720
Factory rent $ 8,600
Property taxes $ 2,800
Factory administration $ 14,970

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.

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 $70,040
Indirect labor 12,620
Utilities 9,410
Supplies 2,590
Equipment depreciation 31,720
Factory rent 8,600
Property taxes 2,800
Factory administration 14,970
Total expense $152,750
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
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

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