Packaging Solutions Corporation manufactures and sells a wide variety of packagi

Question

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, here 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 $16.18q $4,48$1.5eq 5,1se.68q $1,200 $8.20q 518,608 $2.60 $8,480 $2,800 $13,700 se.58q The Production Department planned to work 4,200 labor-hours in March; however, it actually worked 4,000 labor-hours during the month. Its actual costs incurred in March are listed below 1 Cost Incurred in March Direct Iabor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration s 65,940 $ 9,880 $ 8,818 s 2,25e 5 29,ee0 s 8,880 s 2,880 $ 15,030 Required: 1. Prepare the Production Department's planning budget for the month 7 Prenare the Production Denartment's flexible budnet for the month

Explanation / Answer

1) Planning budget :

2) Flexible budget :

Direct labour 67620 Indirect labour 10700 Utilities 7620 Supplies 2040 Equipment depreciation 29520 Factory rent 8400 Property taxes 2800 Factory administration 15800 Total Production cost 144500

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