JHF Packaging manufactures and sells a wide variety of packaging products. The p
ID: 2583032 • Letter: J
Question
JHF Packaging manufactures and sells a wide variety of packaging products. The planning (static) budget and flexible budget for the Production Department are based on the following formulas, where Q is the number of direct labor-hours worked in a month:
The acutal costs incurred in April in the Production Department are listed below:
The company had budgeted for an activity level for 4,000 direct labor-hours in April, but actually only worked 3,800 direct labor-hours.
Required:
Prepare the Production Department's flexible budget performance report for April, including both activity and spending variances.
Direct Labor $16.30Q Supplies $1.40Q Indirect Labor $4,300 + $15.10Q Utilities $5,600 + $0.70Q Equipment depreciation $29,800 Factory rent $8,300 Property insurance $2,800Explanation / Answer
Actual Spending variances Flexible budget Activity variances Planning budget Direct Labor 63250 1310 U 61940 3260 F 65200 Supplies 5710 390 U 5320 280 F 5600 Indirect Labor 61230 450 F 61680 3020 F 64700 Utilities 8790 530 U 8260 140 F 8400 Equipment Depreciation 29800 0 None 29800 0 None 29800 Factory Rent 8300 0 None 8300 0 None 8300 Property Insurance 2400 400 F 2800 0 None 2800 Total 179480 1380 U 178100 6700 F 184800
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