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	$16.60q
Indirect labor	$4,000 + $1.80q
Utilities	$5,600 + $0.80q
Supplies	$1,300 + $0.20q
Equipment depreciation	$18,500 + $2.40q
Factory rent	$8,200
Property taxes	$2,400
Factory administration	$13,500 + $0.50q

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	$	11,100
Utilities	$	9,510
Supplies	$	2,390
Equipment depreciation	$	28,580
Factory rent	$	8,600
Property taxes	$	2,400
Factory administration	$	14,930

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.

Answer 1

Hi

Let me know in case you face any issue: Ignore the order of commas in amount: