Question
Exercise 9-14 (Static) 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
Exercise 9-14 (Static) 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 | $11,700 + $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 | $ | 26,470 | |
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.
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 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 Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Packaging Solutions Corporation Production Department Flexible Budget Performance Report For the Month Ended March 31 Actual Results Flexible Budget Planning Budget Labor-hours 8,400 Direct labor $ 134,730 Indirect labor 19,860 Utilities 14,570 4,980 54,080 Supplies Equipment depreciation Factory rent Property taxes Factory administration 8,700 2,100 26,470 Total expense $ 265,490Step by Step Solution
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