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 Supplies Equipment depreciation Factory rent Property taxes Factory administration Cost Formulas $16.409 $4,200 + $2.009 $5,200 + $0.50 $1.600 + $0.409 $18.500 + $ 2.909 S8.500 $2.400 $13,600 + $0.909 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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Actual Cost Incurred in March $ 68,840 $ 11,900 $ 7,740 $ 3.530 $ 30,390 $ 8,900 $ 2.400 $ 16,700 Required: 1. Prepare the Production Department's planning budget for the month. 2. Prepare the Production Department's flexible budget for the month. 3. Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances. You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16, 600 + $0.15 per machine-hour $30, 300 + $1.90 per mach $0.60 per machine-hour $94,900 + $1.90 per machine-hour $67.700 Actual Cost in March $ 21,400 $ 70.100 $ 11,800 $133,800 $ 69, 400 During March, the company worked 18,000 machine-hours and produced 12,000 units. The company had originally planned to work 20,000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March. Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria's owner has determined that the shop has two major cost drivers-the number of pizzas sold and the number of deliveries made. The pizzeria's cost formulas appear below: cost per Delivery Fixed Cost Cost per per Month Pizza $ 4.00 $6,270 $ 790 $ 0.10 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $2.90 $2.10 $ 810 $ 544 $2.230 $ 910 $ 0.05 In November, the pizzeria budgeted for 2,100 pizzas at an average selling price of $17 per pizza and for 240 deliveries. Data concerning the pizzeria's actual results in November appear below: Actual Results 2,200 220 Pizzas Deliveries $ 38, 130 $ 10,450 $ 6,210 975 Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $ $ $ $ 1,022 544 2.230 89B Required: 1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (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.)
