Exercise 9-16 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: Cost Formulas Direct labor $16.30g $4,700 + $1.80q $5,400 + $0.70g $1,600 + $0.30q $18,800 + $2.80q $8,100 $2,900 $13,800 $0.60g Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration 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: Actual Cost Incurred in March $66,780 $11,440 $ 8,730 $ 3,070 $30,000 $ 8,500 $ 2,900 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Next > Prev 2 of 6 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2Required 3 Prepare the Production Department's planning budget for the month 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 Required 1 Required 2 E Required 3 Prepare the Production Department's flexible budget for the month. 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 Required! Required 3 Required 2Required 3 Required 1 Calculate the spending variances for all expense items. (Indicate the effect of each for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts a Packaging Solutions Corporation Spending Variances For the Month Ended March 31 Actual Flexible Spending Variances Results Budget Labor-hours 4,000 $66,780 Direct labor Indirect labor 11,440 8,730 Utilities Supplies 3,070 30,000 Equipment depreciation 8,500 Factory rent Property taxes 2,900 15,550 Factory administration $146,970 Total expense K Required 2 Required 3
