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 $ 4,700 + $ 2.10q $ 5,700 + $ 0.40q $ 1,500 + $ 0.10q $18,400 + $ 3.00q $8,100 $2,600 $13,300 + $ 0.50q The actual costs incurred in March in the Production Department are listed below: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Actual Cost Incurred in March $ 68,410 $ 12,910 $ 7,810 $ 2,140 $ 30,700 $ 8,500 $ 2,600 $ 14,680

Explanation / Answer

1. Planning Budget is as prepared below:

2. Flexible Budget is as prepared below:

3. Spending Varaince is as calculated below:

Packaging Solutions Corporation Production Department Planning Budget For the Month Ended march 31 Particulars Planning Budget Labour hours 4,300 Direct Labour 16.3q 70,090 Indirect labour 4,700+2.1q 13,730 Utilities 5,700+.4q 7,420 Supplies 1,500+.1q 1,930 Equipment dep 18,400+3q 31,300 Factory Rent 8,100 8,100 Property taxes 2,600 2,600 Factory administration 13,300+.5q 15,450 Total expense 150,620

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