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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Cost Formulas $16.10g $4,100 + $1.609 $5,400 + $0.500 $1,400 + $0.209 $18,600 + $ 2.400 $8,200 $2,900 $13,500 + $0.709 The Production Department planned to work 4,400 labor-hours in March; however, it actually worked 4,200 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 $ 69,160 $ 10, 320 $ 7,990 $ 2,490 $ 28,680 $ 8,600 $ 2,900 $ 15,810 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. Prepare the Production Department's planning budget for the month. Packaging Solutions Corporation Production Department Planning Budget For the Month Ended March 31 Budgeted labor-hours $ Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense 70,840 10,500 7,600 2,280 29,160 8,600 2,900 15,810 147,690 $ Prepare the Production Department's flexible budget for the month. Packaging Solutions Corporation Production Department Flexible Budget For the Month Ended March 31 Actual labor-hours 4,200 s Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense 67,620 10,820 7,500 2,240 28,680 8,600 2,900 15,810 144,170 $ 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 Spending Variances Results 4,200 Flexible Budget 4,400 Labor-hours Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense 69,160 10,320 7,990 2,490 28,680 8,600 2,900 15,810 145,950 $
