Instructions Make sure you read Chapters 9 and 10. Review the power points, links, and excel presentations. Please complete the following and submit by Sunday. Note each problem assigned is worth 12.5 points. Be sure you complete your work using Microsoft Excel or Word. 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 $15.809 Indirect labor Utilities $8,200 + $ 1.609 $6,400 + $0.809 $1,100 + $0.409 $23,000 + $3.709 Supplies Equipment depreciation Factory rent Property taxes Factory administration $8,400 $2,100 $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 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 $ 54,080 $ 8,700 Equipment depreciation Factory rent Property taxes Factory administration $ 2,100 $ 26,470 Required: 1. Prepare the Production Department's planning budget for the month. 2. Prepare the Production Department's flexible budget for the month. 3. Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances. 3. The flexible budget performance report appears below. This report does not include revenue or net operating income because the production department is a cost center that does not have any revenue. Packaging Solutions Corporation Production Department Flexible Budget Performance Report For the Month Ended March 31 Activity Variances Actual Spending Results Variances 8,400 $134,730$???? U 19,860 1,780 F 14,570 ??? 4,980 ??? | U Flexible Budget 8,400 $???? ???? 13,120 ???? Planning Budget 8,000 $???? 21,000 ???? 4,300 $????? 640 U ??? 160 U IIIIII Labor-hours (q).. Direct labor ($15.809) Indirect labor ($8,200 + $1.60q) ... Utilities ($6,400 + $0.80) Supplies ($1,100 + $0.40) Equipment depreciation ($23,000 + $3.709). Factory rent ($8,400) Property taxes ($2,100) .. Factory administration ($11,700 + $1.909) Total expense 54,080 8,700 2,100 0 300 U 0 ???? 8,400 ???? ???? 0 0 ???? 8,400 ???? 26.470 $265,490 ??? F ???? $1,310 U $264,180 ??? | U $9,680 26,900 $???? 4. The overall unfavorable activity variance of $. occurred because the actual level of activity exceeded the budgeted level of activity. The production manager certainly should not be held responsible for this unfavorable variance if this increased activity was due to more orders or more sales. On the other hand, the overall unfavorable spending variance of $. may be of concern to management. Why did the unfavorableand favorable-variances occur? Even the relatively small unfavorable spending variance for supplies of $520 should probably be investigated because, as a percentage of what the cost should have been ($520/$4,460 = %), this variance is fairly large