Packaging Solutions Corporation C Not Securé e2t8.m tion.comyim.ipx Exercise 8-1

Question

Packaging Solutions Corporation C Not Securé e2t8.m tion.comyim.ipx Exercise 8-16 Flexible Budgets in a Cost Center [L08-1, LO8-2] 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 $16.60q $ 4,100 $ 1.50q 5,600 0.80q 1,800 $ 0.40q $18,400 $ 2.40q $8,100 $3,000 $13,700+$ 0.80q The actual costs incurred in March in the Production Department are listed below Actual Cost Incurred in $ 66,380 $ 9,430 s 9,270 S 3,850 27,760 $ 8,500 3,000 $16,210 Direct labor Indirect labor Utilities Factory rent Property taxes Factory administration Required 1. The company had budgeted for an activity level of 4,100 labor-hours in March. Complete the Production Department's planning budget for the month. Packaging Solutions Corporation Production Department Planning Budget 5 FI F2 F3 FS ·F& 8

Explanation / Answer

Production Department Planning Budget Direct labor 68060 Indirect labor 10250 Utilities 8880 Supplies 3440 Equipment depreciation 28240 Factory rent 8100 Property 3000 Factory administration 16980 Total expense 146950 2 Production Department Flexible Budget Direct labor 64740 Indirect labor 9950 Utilities 8720 Supplies 3360 Equipment depreciation 27760 Factory rent 8100 Property 3000 Factory administration 16820 Total expense 142450 3 Production Department Flexible Budget Performance Report Direct labor 1640 U Indirect labor 520 U Utilities 550 U Supplies 290 U Equipment depreciation 0 None Factory rent 400 U Property 0 None Factory administration 610 U Total expense 1750 U

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