Exercise 9-14 (Algo) Flexible Budget Performance Report in a Cost Center [LO9-1, LO9-2, LO9-3, LO9-4]

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	$4,600 + $2.00q
Utilities	$5,600 + $0.40q
Supplies	$1,600 + $0.20q
Equipment depreciation	$18,400 + $2.40q
Factory rent	$8,400
Property taxes	$3,000
Factory administration	$13,300 + $0.70q

The Production Department planned to work 4,500 labor-hours in March; however, it actually worked 4,300 labor-hours during the month. Its actual costs incurred in March are listed below:

	Actual Cost Incurred in March
Direct labor	$ 71,670
Indirect labor	$ 12,780
Utilities	$ 7,790
Supplies	$ 2,710
Equipment depreciation	$ 28,720
Factory rent	$ 8,800
Property taxes	$ 3,000
Factory administration	$ 15,680

Required:

1. Prepare the Production Departments planning budget for the month.

2. Prepare the Production Departments flexible budget for the month.

3. Prepare the Production Departments flexible budget performance report for March, including both the spending and activity variances.