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	$4,700 + $2.10q
Utilities	$5,200 + $0.50q
Supplies	$1,600 + $0.30q
Equipment depreciation	$18,400 + $2.60q
Factory rent	$8,600
Property taxes	$2,600
Factory administration	$13,200 + $0.70q

The Production Department planned to work 4,100 labor-hours in March; however, it actually worked 3,900 labor-hours during the month. Its actual costs incurred in March are listed below:

	Actual Cost Incurred in March
Direct labor	$ 65,560
Indirect labor	$ 12,490
Utilities	$ 7,640
Supplies	$ 3,040
Equipment depreciation	$ 28,540
Factory rent	$ 9,000
Property taxes	$ 2,600
Factory administration	$ 15,300

Required:

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

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

3. Prepare the Production Departments flexible budget performance report for March, including both the spending and activity variances.

Prepare the Production Departments planning budget for the month.

1)

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	$0

2)

Prepare the Production Departments 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	$0

3)

Prepare the Production Departments flexible budget performance report for March, including both the spending and activity variances. (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
Production Department Flexible Budget Performance Report
For the Month Ended March 31
	Actual Results			Flexible Budget			Planning Budget
Labor-hours	3,900
Direct labor	$65,560
Indirect labor	12,490
Utilities	7,640
Supplies	3,040
Equipment depreciation	28,540
Factory rent	9,000
Property taxes	2,600
Factory administration	15,300
Total expense	$144,170