Packaging Solutions Corporation manufactures and sells a wide variety of packagi
ID: 2569855 • Letter: P
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:
The actual costs incurred in March in the Production Department are listed below:
The company had budgeted for an activity level of 4,300 labor-hours in March. Complete the Production Department’s planning budget for the month.
The company actually worked 4,100 labor-hours in March. Complete the Production Department’s flexible budget for the month.
Calculate the spending variances for all expense items. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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:
Explanation / Answer
1) Planning Budget Direct labor 69660 (4300*16.2) Indirect labor 10090 (4500+(4300*1.3)) Utilities 6690 (5400+(4300*0.3)) Supplies 2030 (1600+(4300*.1)) Equipment depreciation 30970 (18500+(4300*2.9)) Factory Rent 8500 Property taxes 2900 Factory administration 15850 (13700+(4300*0.5)) Total 146690 2) Flexible Budget Direct labor 66420 (4100*16.2) Indirect labor 9830 (4500+(4100*1.3)) Utilities 6630 (5400+(4100*0.3)) Supplies 1641 (1600+(4100*.01)) Equipment depreciation 30390 (18500+(4100*2.9)) Factory Rent 8500 Property taxes 2900 Factory administration 15750 (13700+(4100*0.5)) Total 142061 3) Flexible Budget Actual Results Spending Variance F/U Direct labor 66420 67980 -1560 U (4100*16.2) Indirect labor 9830 9270 560 F (4500+(4100*1.3)) Utilities 6630 7080 -450 U (5400+(4100*0.3)) Supplies 2010 2240 -230 U (1600+(4100*.1)) Equipment depreciation 30390 30390 0 (18500+(4100*2.9)) Factory Rent 8500 8900 -400 U Property taxes 2900 2900 0 Factory administration 15750 15080 670 F Total 142430 143840 -1410 U
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