Exercise $9-16$ Flexible Budgets in a Cost Center $[$LO$9-1,$ LO$9-2]$

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\mathrm{.}30$q

Indirect labor $$4,400+$ $$1\mathrm{.}70$q

Utilities $$5,000+$ $$0\mathrm{.}60$q

Supplies $$1,800+$ $$0\mathrm{.}30$q

Equipment depreciation $$18,700+$ $$2\mathrm{.}90$q

Factory rent $$8,500$

Property taxes $$2,900$

Factory administration $$13,400+$ $$0\mathrm{.}50$q

The Production Department planned to work $4,300$ labor$-$hours in March; however, it actually worked $4,100$ labor$-$hours during the month. Its actual costs incurred in March are listed below:

Actual Cost Incurred in March

Direct labor $ $68,410$

Indirect labor $ $10,890$

Utilities $ $7,970$

Supplies $ $3,300$

Equipment depreciation $ $30,590$

Factory rent $ $8,900$

Property taxes $ $2,900$

Factory administration $ $14,780$

Required:

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

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

$3.$ Calculate the spending variances for all expense items.