EXERCISE 9-16 Flexible Budgets in a Cost Center L09-1, L09-2 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 is the number of labor-hours worked in a month: Cost Formulas Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration $15.809 $8,200 + $1.604 $6,400 + $0.800 $1,100+ $0.404 $23,000+ $3.704 $8,400 $2,100 $11.700+ $1.900 The Production Department planned to work 8,000 labor-hours in March; however, it actually worked 8,400 labor hours during the next month. Its actual costs incurred in March are listed below: Direct labor Actual Cost Incurred in March $134,730 $19,860 Indirect labor Utilities $14,570 $8.400 Factory rent Property taxes Factory administration $2,100 $11.700 + 51.904 The Production Department planned to work 8,000 labor-hours in March: however, it actually worked 8.400 labor-hours during the 14 month. Its actual costs incurred in March are listed below: Direct labor Actual Cost Incurred in March $134,730 $19.860 Indirect labor Utilities S14,570 $4.980 $54,080 Supplies Equipment depreciation Factory rent Property taxes Factory administration $8,700 $2.100 $26,470 Required: 1. Using Exhibit 9-2 as your guide, prepare the Production Department's planning budget for the month. 2. Using Exhibit 9-5 as your guide, prepare the Production Department's flexible budget for the month. 3. Calculate the spending variances for all expense items.(Hine. Refer to Exhibit 9-6)