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 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 Usities Supplies Equipment depreciation Factory rent Property taxes Factory administration $16.30q $ 4,400+ 2.00q $5,200 $ 0.50q $1,500 S 0.20q $18,700+$ 2.70q $8,100 $2,500 $13,500+$ 0.70q The actual costs incurred in March in the Production Department are listed below: Actual Cost Incurred in March $ 65,150 $ 11,780 $ 7,640 $ 2,530 $ 29.230 8,500 S 2,500 $ 15,600 Direct labor Indirect labor Utilities Supplies Factory rent Property taxes Factory administration

Explanation / Answer

1 Production department planning budget Direct labor 66830 Indirect labor 12600 Utilities 7250 Supplies 2320 Equipment depreciation 29770 Factory rent 8100 Property taxes 2500 Factory administration 16370 Total expense 145740 2 Production department flexible budget Direct labor 63570 Indirect labor 12200 Utilities 7150 Supplies 2280 Equipment depreciation 29230 Factory rent 8100 Property taxes 2500 Factory administration 16230 Total expense 141260 3 Spending variance Direct labor 1580 U Indirect labor 420 F Utilities 490 U Supplies 250 U Equipment depreciation 0 None Factory rent 400 U Property taxes 0 None Factory administration 630 F Total expense 1670 U

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