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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
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: Direct labor Indirect labor Utilities Cost Formulas $16.200 $4,500 +$1.800 $5,200 $0.80q Supplies $1,700 +$0.40q Equipment depreciation $18,200 +$2.600 Factory rent $8, 200 $2,500 Property taxes Factory administration. $13,500 $0.60q 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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Required: Actual Cost Incurred in March $ 66,360 $ 11,240 $ 8,950 $3,590 $ 28,600 $8,600 $2,500 $ 15,250 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.
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