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 q is the number of labor-hours worked in a month: Cost Formulas Direct labor $15.804 Indirect labor Utilities $8,200+ $1.602 $6,400 + $0.807 $1,100+ $0.404 $23,000+ $3.709 Supplies Equipment depreciation Factory rent $8,400 Property taxes $2,100 Factory administration $11,700 + $1.909 The Production Department planned to work 8,000 labor-hours in March; however, it actually worked 8,400 labor-hours during the Page 434 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. 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.(Hint: Refer to Exhibit 9-6.)