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 40 q Indirect labor $4,800 $1 50 q Utilities $5,700 $0 80 q Supplies $1,300 $0 10 q Equipment depreciation $18,500 $2 90 q Factory rent $8,300 Property taxes $2,800 Factory administration $13,100 $0 60 q The Production Department planned to work 4,000 labor hours in March however, it actually worked 3,800 labor hours during the month Its actual costs incurred in March are listed below Actual Cost Incurred in March Direct labor $ 63,920 Indirect labor $ 9,980 Utilities $ 9,290 Supplies $ 1,910 Equipment depreciation $ 29,520 Factory rent $ 8,700 Property taxes $ 2,800 Factory administration $ 14,730 Required 1 Prepare the Production Departments planning budget for the month Prepare the Production Departments planning budget for the month Packaging Solutions Corporation Production Department Planning Budget For the Month Ended March 31 Budgeted labor hours Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense $0 2 Prepare the Production Departments flexible budget for the month Packaging Solutions Corporation Production Department Flexible Budget For the Month Ended March 31 Actual labor hours Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense $0 3 Calculate the spending variances for all expense items (Indicate the effect of each variance by selecting F for favorable, U for unfavorable, and None for no effect (i e , zero variance) Input all amounts as positive values ) Packaging Solutions Corporation Spending Variances For the Month Ended March 31 Actual Results Spending Variances Flexible Budget Labor hours 3,800 Direct labor $63,920 Indirect labor 9,980 Utilities 9,290 Supplies 1,910 Equipment depreciation 29,520 Factory rent 8,700 Property taxes 2,800 Factory administration 14,730 Total expense $140,850

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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

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	$16.40q
Indirect labor	$4,800 + $1.50q
Utilities	$5,700 + $0.80q
Supplies	$1,300 + $0.10q
Equipment depreciation	$18,500 + $2.90q
Factory rent	$8,300
Property taxes	$2,800
Factory administration	$13,100 + $0.60q

The Production Department planned to work 4,000 labor-hours in March; however, it actually worked 3,800 labor-hours during the month. Its actual costs incurred in March are listed below:

	Actual Cost Incurred in March
Direct labor	$	63,920
Indirect labor	$	9,980
Utilities	$	9,290
Supplies	$	1,910
Equipment depreciation	$	29,520
Factory rent	$	8,700
Property taxes	$	2,800
Factory administration	$	14,730

Required:

1. Prepare the Production Departments planning budget for the month.

Prepare the Production Departments planning budget for the month.

Packaging Solutions Corporation
Production Department Planning Budget
For the Month Ended March 31
Budgeted labor-hours

Direct labor
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
Total expense	$0

2. Prepare the Production Departments flexible budget for the month.

Packaging Solutions Corporation
Production Department Flexible Budget
For the Month Ended March 31
Actual labor-hours

Direct labor
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
Total expense	$0

3. Calculate the spending variances for all expense items. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Packaging Solutions Corporation
Spending Variances
For the Month Ended March 31
	Actual Results	Spending Variances	Flexible Budget
Labor-hours	3,800

Direct labor	$63,920
Indirect labor	9,980
Utilities	9,290
Supplies	1,910
Equipment depreciation	29,520
Factory rent	8,700
Property taxes	2,800
Factory administration	14,730
Total expense	$140,850