The Ramon Company manufactures and distributes a broad range of packaging materials. Monthly performance reports are generated for each department. The Production Department's planned budget and flexible budget are calculated using the following formulas, where q is the number of labour hours employed in a month: Cost Formulas Direct labor $16.80q Indirect labor $9,200+ $1.60q Utilities $7,400 + $0.80q Supplies $1,200 + $0.50q Equipment depreciation $25,000+ $3.75q Factory rent $8,500 Property taxes $2,200 Factory administration $13,700+ $1.70q The Production Department planned to work 8,000 labor-hours in March; however, it actually worked 8,500 labor-hours during the month. Its actual costs incurred in March are listed below: Actual Cost Incurred in March Direct labor $135,730 Indirect labor $21,860 Utilities $15,570 Supplies $3,980 Equipment depreciation $54,080 Factory rent $8,900 Property taxes $2,500 Factory administration $25,470 Required: 1. Prepare the Production Department's planning budget for the month. 2. Prepare the Production Department's flexible budget for the month. 3. Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances. 4. What aspects of the flexible budget performance report should be brought to management's attention? Explain.