Exercise 8-16 Flexible Budgets in a Cost Center LO8-1, Lo8-21 Packaging Solution

Question

Exercise 8-16 Flexible Budgets in a Cost Center LO8-1, Lo8-21 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 $16.60q S 4,600+ $ 1.70q S 5,300+ $0.50q S 1,800+0.10q $18,400 3.10q $8,200 $2,400 $13,700$ 0.70q The actual costs incurred in March in the Production Department are listed below Actual Cost Incurred in Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration March $ 64,720 $ 10,580 $ 7,690 $ 2,410 S 30,180 S 8,600 2,400 15,730

Explanation / Answer

Req 1: Planning Budget: Direct Labor 66400 Indirect Labor 11400 Utilities 7300 Supplies 2200 Equipment depreciation 30800 Factory rent 8200 Property taxes 2400 Factory depreciation 16500 Total expense 145200 Req 2: Flexible budget: Direct Labor 63080 Indirect Labor 11060 Utilities 7200 Supplies 2180 Equipment depreciation 30180 Factory rent 8200 Property taxes 2400 Factory depreciation 16360 Total expense 140660 Req 3: Performance report Standard Actual Spending Variance Direct Labor 63080 64720 1640 Unfav Indirect Labor 11060 10580 480 Fav Utilities 7200 7690 490 UNfav Supplies 2180 2410 230 Unfav Equipment depreciation 30180 30180 0 Factory rent 8200 8600 400 Unfav Property taxes 2400 2400 0 Factory depreciation 16360 15730 630 Fav Total expense 140660 142310 1650 unfav

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.