EXERCISE 9-14 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 . . $15.80q Indirect labor . . $8,200 + $1.60q Utilities . . .. $6,400 + $0.80q Supplies ..... .. $1,100 + $0.40q Equipment depreciation $23,000 + $3.70q Factory rent . . . . . . ... $8,400 Property taxes . . . . . . . . . . . $2, 100 Factory administration . . .... $1 1,700 + $1.90q The Production Department planned to work 8,000 labor-hours in March; however, it actually worked 8,400 labor-hours during the month. Its actual costs incurred in March are listed below: Actual Cost Incurred in March Direct labor $134.730 Indirect labor . . $19,860 Utilities . . $14,570 Supplies . . . . . . . $4,980 Equipment depreciation $54,080 Factory rent . . . $8,700 Property taxes . . . . . $2, 100 Factory administration $26,470Required: 1. Using Exhibit 92 as your guide. plague the Ptuductiut: Department's planning budget fut the month. 2. Using Exhibit 95 as your guide, prepare the Production Department's exible budget for the month. 3. Using Exhibit 9-3 as your guide, prepare the Production Department's flexible budget perfor- mance report for March, including both the spending and activity variances. 4. What aspects of the flexible budget performance report should be brought to management's attention? Explain