8 15.00 points Packaging Solutions Corporation manufactures and sells a wide var

Question

8 15.00 points 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: 16.40 4,000 1.50q $5200 +S080 1,500 0.30 18500$ 2.40 8.600 Direct labor Supplies Equipment depreciation Factory nent Property taes Factory administraion 13.300 0.90 The actual costs incurred in March in the Production Department are listed below Direct labor 68.840 s 9.630 9.030 s 3.000 Supplies Equipment depreciation Factory nent Propety taxe Factory administraion s 2.500 516,400 Required 1. The company had budgeted for an activity level of 4,300 labor-hours in March Complete the Production Department's planning budget for the month. Supplies 2. The company actually worked 4,100 labor-hours in March. Complete the Production Department's flexible budget for the month. Production Department Flexible Budget

Explanation / Answer

Ans.1 Packaging Solutions Corporation Production Department Planning Budget For the Month Ended March 31 4300 labor hours Direct labor (16.40*4300) 70520 Indirect labor (4000+(1.50*4300) 10450 Utilities [5200+(0.80*4300)] 8640 Supplies [1500+(0.30*4300)] 2790 Equipment depreciation [18500+(2.40*4300)] 28820 Factory rent 8600 Property taxes 2500 Factory administration [13300+(0.90*4300)] 17170 Total expenses 149490 Ans.2 Packaging Solutions Corporation Production Department Flexible Budget For the Month Ended March 31 4100 labor hours Direct labor (16.40*4100) 67240 Indirect labor (4000+(1.50*4100) 10150 Utilities [5200+(0.80*4100)] 8480 Supplies [1500+(0.30*4100)] 2730 Equipment depreciation [18500+(2.40*4100)] 28340 Factory rent 8600 Property taxes 2500 Factory administration [13300+(0.90*4100)] 16990 Total expenses 145030 Ans.3 Packaging Solutions Corporation Production Department Flexible Budget Performance Report For the Month Ended March 31 Speding Variance Activity Variance Direct labor 1600 U 3280 F Indirect labor 520 F 300 F Utilities 550 U 160 F Supplies 270 U 60 F Equipment depreciation 0 no effect 480 F Factory rent 400 U 0 no effect Property taxes 0 no effect 0 no effect Factory administration 590 F 180 F Total expenses 1710 U 4460 F *Spending Variance = Flexible Budget - Actual Results *Activity Variance    = Planning Budget - Flexible Budget *Increase in Costs   =   Unfavorable    &    Decrease in Costs = Favorable. *Calculation: Flexible Actual Speding Variance Planning Flexible Activity Variance Direct labor 67240 68840 -1600 70520 67240 3280 Indirect labor 10150 9630 520 10450 10150 300 Utilities 8480 9030 -550 8640 8480 160 Supplies 2730 3000 -270 2790 2730 60 Equipment depreciation 28340 28340 0 28820 28340 480 Factory rent 8600 9000 -400 8600 8600 0 Property taxes 2500 2500 0 2500 2500 0 Factory administration 16990 16400 590 17170 16990 180 Total expenses 145030 146740 -1710 149490 145030 4460

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