Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The budget for the Production Department is prepared based on the following formulas, where h is the number of labor-hours worked in a month. Actual data for March is also given in rightmost column when a total of 8,400 labor-hours were worked.

Costs

Formulas

Actual (at 8,400 h)

Sales

$34 h

290,000

Direct labor

$15.80 h

134,730

Indirect labor

$8,200 + $1.60 h

19,860

Utilities

$6,400 + $0.80 h

14,570

Supplies

$1,100 + $0.40 h

4,980

Equipment depreciation

$23,000 + $3.70 h

54,080

Factory rent

$8,400

8,700

Property taxes

$2,100

2,100

Factory administration

$11,700 + $1.90 h

26,470

Required:

a) Based on the above data, prepare the revenue and spending variance for the month.

b) Which variance from requirement a) should be brought to management's attention? Why?