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 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration $16.30q $ 4,100+$ 1.70q $ 5,800+$ 0.80q $ 1,400+$ 0.10q $18,500+$ 2.60q $8,500 $2,500 $13,700+$ 0.50q 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 $ 70,040 $10,760 $ 9,710 $ 2,050 $29,420 $ 8,900 $ 2,500 $ 15,130

Explanation / Answer

1 Planning Budget Direct labor 71720 =4400*16.3 Indirect labor 11580 =4100+(4400*1.7) Utilities 9320 =5800+(4400*0.8) Supplies 1840 =1400+(4400*0.1) Equpment depreciation 29940 =18500+(4400*2.6) Factory rent 8500 Property taxes 2500 Factory administration 15900 =13700+(4400*0.5) Total expense 151300 2 Flexible Budget Direct labor 68460 =4200*16.3 Indirect labor 11240 =4100+(4200*1.7) Utilities 9160 =5800+(4200*0.8) Supplies 1820 =1400+(4200*0.1) Equpment depreciation 29420 =18500+(4200*2.6) Factory rent 8500 Property taxes 2500 Factory administration 15800 =13700+(4200*0.5) Total expense 146900 3 Spending variances Direct labor 1580 U Indirect labor 480 F Utilities 550 U Supplies 230 U Equpment depreciation 0 None Factory rent 400 U Property taxes 0 None Factory administration 670 F Total expense 1610 U

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