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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 $16.30q Indirect labor $4,500 + $1.90q Utilities $5,200 + $0.70q Supplies $1,600 + $0.30q Equipment depreciation $18,600 + $2.60q Factory rent $8,400 Property taxes $2,600 Factory administration $13,800 + $0.90q
The Production Department planned to work 4,300 labor-hours in March; however, it actually worked 4,100 labor-hours during the month. Its actual costs incurred in March are listed below:
Actual Cost Incurred in March Direct labor $ 68,410 Indirect labor $ 11,850 Utilities $ 8,600 Supplies $ 3,100 Equipment depreciation $ 29,260 Factory rent $ 8,800 Property taxes $ 2,600 Factory administration $ 16,900
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.
Cost Formulas | |
---|---|
Direct labor | $16.30q |
Indirect labor | $4,500 + $1.90q |
Utilities | $5,200 + $0.70q |
Supplies | $1,600 + $0.30q |
Equipment depreciation | $18,600 + $2.60q |
Factory rent | $8,400 |
Property taxes | $2,600 |
Factory administration | $13,800 + $0.90q |
The Production Department planned to work 4,300 labor-hours in March; however, it actually worked 4,100 labor-hours during the month. Its actual costs incurred in March are listed below:
Actual Cost Incurred in March | |
---|---|
Direct labor | $ 68,410 |
Indirect labor | $ 11,850 |
Utilities | $ 8,600 |
Supplies | $ 3,100 |
Equipment depreciation | $ 29,260 |
Factory rent | $ 8,800 |
Property taxes | $ 2,600 |
Factory administration | $ 16,900 |
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.
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