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, where q is the number of labor-hours worked in a month Cost Formulas Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration $16.40q $4,500 $1.80q $5,600 $0.300q $1,400 $0.30q $18,600 $3.00q $8,100 $3,000 $13,200 $0.80q The Production Department planned to work 4,100 labor-hours in March; however, it actually worked 3,900 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 $ 65,560 $ 11,060 $ 7,2260 $ 2,840 $ 30,300 $ 8,500 $ 3,000 $ 15,710

Explanation / Answer

Packing solutions corporations Production department planning Budget For the month ended March 31 Labor - hours q           4,100 Direct labor $16.40 q $    67,240 Indirect labor [$4,500 + ($1.80 X q)] $    11,880 Utilities [$5,600 + ($0.30 X q)] $      6,830 Supplies [$1,400 + ($0.30 X q)] $      2,630 Equipment depreciation [$18,600 + ($3.00 X q)] $    30,900 Factory Rent $8,100 $      8,100 Property taxes $3,000 $      3,000 Factory administration [$13,200 + ($0.80 X q)] $    16,480 Total expense $1,47,060 Packing solutions corporations Production department flexible Budget For the month ended March 31 Labor - hours q           3,900 Direct labor $16.40 q $    63,960 Indirect labor [$4,500 + ($1.80 X q)] $    11,520 Utilities [$5,600 + ($0.30 X q)] $      6,770 Supplies [$1,400 + ($0.30 X q)] $      2,570 Equipment depreciation [$18,600 + ($3.00 X q)] $    30,300 Factory Rent $8,100 $      8,100 Property taxes $3,000 $      3,000 Factory administration [$13,200 + ($0.80 X q)] $    16,320 Total expense $1,42,540 Packing solutions corporations Production department flexible Budget performance report For the month ended March 31 Actual results Revenue and Spending Variances Flexible Budget Activity Variance Planning Budget Labor - hours 3900                 3,900           4,100 Direct labor $                             65,560 $      1,600 U $          63,960 $    3,280 F $    67,240 Indirect labor $                             11,060 $          460 F $          11,520 $        360 F $    11,880 Utilities $                               7,220 $          450 U $            6,770 $          60 F $      6,830 Supplies $                               2,840 $          270 U $            2,570 $          60 F $      2,630 Equipment depreciation $                             30,300 $             -   None $          30,300 $        600 F $    30,900 Factory Rent $                               8,500 $          400 U $            8,100 $           -   F $      8,100 Property taxes $                               3,000 $             -   None $            3,000 $           -   F $      3,000 Factory administration $                             15,710 $          610 F $          16,320 $        160 F $    16,480 Total expense $                         1,44,190 $      1,650 U $      1,42,540 $    4,520 F $1,47,060

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