Exercise 9-15 Flexible Budget Performance Report in a Cost Center [LO9-1, LO9-4]

Question

Exercise 9-15 Flexible Budget Performance Report in a Cost Center [LO9-1, LO9-4] 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 $16.20q 4,200+ 1.50q $ 5,800+ 0.50q $ 1,800+ 0.10q $18,400+ 2.70q $8,100 $2,700 $13,100+S 0.80q The actual costs incurred in March in the Production Department are listed below: Actual Cost Incurred in March $63,120 S 9,380 $ 8,190 $ 2,410 $ 28,660 S 8,500 $ 2,700 15,530 Direct labor Indirect labor Supplies Equipment depreciation Factory rent Property taxes Factory administration

Explanation / Answer

Actual Spending variances Flexible budget Activity variances Planning budget Direct labor 63120 1560 U 61560 3240 F 64800 Indirect labor 9380 520 F 9900 300 F 10200 Utilities 8190 490 U 7700 100 F 7800 Supplies 2410 230 U 2180 20 F 2200 Equipment depreciation 28660 0 None 28660 540 F 29200 Factory rent 8500 400 U 8100 0 None 8100 Property taxes 2700 0 None 2700 0 None 2700 Factory administration 15530 610 F 16140 160 F 16300 Total expenses 138490 1550 U 136940 4360 F 141300 Note: All 3 questions have been solved together

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