Exercise 9-16 (Algo) Flexible Budgets in a Cost Center (LO9-1, LO9-2] 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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Cost Formulas $16.500 $4,700 + $2.10 $5,100 + $0.809 $1,600 + $0.209 $18, 100 + $ 2.50 $ 8,400 $2,900 $13,200 + $0.709 The Production Department planned to work 4,200 labor-hours in March; however, it actually worked 4,000 labor-hours during the month. Its actual costs incurred in March are listed below: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Actual Cost Incurred in March $ 67,620 $ 12,700 $ 8,850 $ 2,650 $ 28, 100 $ 8,800 $ 2,900 $ 15,370 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. 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 Packaging Solutions Corporation Spending Variances For the Month Ended March 31 Actual Spending Variances Results 4,000 Flexible Budget Labor-hours Direct labor $ 67,620 12,700 8,850 2,650 Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration 28,100 8,800 2,900 15,370 Total expense $ 146,990