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 $15.80q

Indirect labor $8,200 + $1.60q

Utilities $6,400 + $0.80q

Supplies $1,100 + $0.40q

Equipment depreciation $23,000 + $3.70q

Factory rent $8,400

Property taxes $2,100

Factory administration $11,700 + $1.90q

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

Equipment depreciation $ 54,080

Factory rent $ 8,700

Property taxes $ 2,100

Factory administration $ 26,470

Required:

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

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

3. Calculate the spending variances for all expense items.

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 is the number of labor-hours worked in a month: Cost Formulas Direct labor $15.800 Indirect labor $8,200 + $1.600 Utilities $6,400 + $0.809 Supplies $1,100 + $0.400 Equipment depreciation $23,000 + $3.709 Factory rent $8,400 Property taxes $2,100 Factory administration $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 Equipment depreciation $ 54,080 Factory rent $ 8,700 Property taxes $ 2,100 Factory administration $ 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. Calculate the spending variances for all expense items. Required 1 Required 2 Required 3 Prepare the Production Department's planning budget for the month. 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 Required 1 Required 2 Required 3 Prepare the Production Department's 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 Required 1 Required 2 Required 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 Flexible Spending Variances Budget Labor-hours 8.400 Direct labor $ 134,730 Indirect labor 19,860 Utilities 14,570 Supplies 4,980 Equipment depreciation 54,080 Factory rent 8.700 Property taxes 2,100 Factory administration 26,470 Total expense $ 265,490