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 $ 2.10q $ 5,200 + 0.80q $1,400 0.40q $18,500 + $ 3.00q $8,200 $2,600 $13,100 0.70q 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 $ 63,520 $11,680 $ 8,790 $ 3,210 $ 29,900 $ 8,600 $ 2,600 $15,130 Required: 1. The company had budgeted for an activity level of 4,000 labor-hours in March. Complete the Production Department's planning budget for the month Packaging Solutions Corporation Production Department Planning Budget

Explanation / Answer

1) Production department Planning Budget

Fixed Amount
$ Hourly Rate
   $ Hours Planning Budget
        $ A B C A+(B*C) Direct Lobour 16.3 4,000 65,200 Indirect Lobour 4,100 2.1 4,000 12,500 Utilities 5,200 0.8 4,000 8,400 Supplies 1,400 0.4 4,000 3,000 Equipment Depriciation 18,500 3 4,000 30,500 Factory Rent 8,200 0 4,000 8,200 Propert Taxes 2,600 0 4,000 2,600 Factory Administration 13,100 0.7 4,000 15,900 146,300

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