Packaging Solutions Corporation manufactures and solls a wide variety of packagi

Question

Packaging Solutions Corporation manufactures and solls a wide variety of packaging products Performance reports are prepared monthly for each department. The planning budget and flexible budget Department are based on the following formulas, whore 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 $16.30q $ 4,700+$2.10q 5,600+$0.30q $ 1,300+$ 0.20q $18,300 2-90 $8,000 $3,000 $13,200+$ 0.50q The actual costs incurred in March in the Production Department are listed below Actual Cost Incurred in Direct labor Indirect labor Utilities 70,040 13,120 Equipment depreciation Factory rent Property taxes Factory administration 2,390 $ 30,480 $ 8,400 3,000 S 14,630

Explanation / Answer

Planning budget Direct labor 71720 =4400*16.3 Indirect labor 13940 =4700+(4400*2.1) Utilities 6920 =5600+(4400*0.3) Supplies 2180 =1300+(4400*0.2) Equipment depreciation 31060 =18300+(4400*2.9) Factory rent 8000 Property taxes 3000 Factory administration 15400 =13200+(4400*0.5) Total expense 152220 Flexible budget Direct labor 68460 =4200*16.3 Indirect labor 13520 =4700+(4200*2.1) Utilities 6860 =5600+(4200*0.3) Supplies 2140 =1300+(4200*0.2) Equipment depreciation 30480 =18300+(4200*2.9) Factory rent 8000 Property taxes 3000 Factory administration 15300 =13200+(4200*0.5) Total expense 147760 Spending variances Direct labor 1580 U Indirect labor 400 F Utilities 450 U Supplies 250 U Equipment depreciation 0 None Factory rent 400 U Property taxes 0 None Factory administration 670 F Total expense 1610 U

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