Question

Exercise 9-16 Flexible Budgets in a Cost Center [LO9-1, LO9-2] 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 Cost Formulas $15.80 $8,200 $1.60q $6,400+$0.80q $1,100 +$0.404 $23,e00 +$3.78q $8,400 $2,100 $11,700 $1.90q Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration The Production Department planned to work 8,000 labor-hours in March; however, it actually worked 8,400 labor-hours during the month Its actual costs incurred in March are listed below Actual Cost Incurred in March Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration $134,730 $ 19,860 $ 14,570 $ 4,980 $ 54,08e $ 8,700 $ 2,100 $ 26,470 Required: 1. Prepare the Production Department's planning budget for the month 2 Prepare the Production Department's flexible budget for the month 3. Calculate the spending variances for alll expense items Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 2 Prepare the Production Department's planning budget for the month Packaging Solutions Corporation

Answer 1

Solution 1:

Packaging Solutions Corporation
Production Department Planning Budget
For the month ended March 31
Particulars	Details	Amount
Direct labor hours		8000
Direct labor	8000*$15.80	$126,400.00
Indirect labor	$8,200 + $1.60*8000	$21,000.00
Utilities	$6,400 + $0.80*8000	$12,800.00
Supplies	$1,100 + $0.40*8000	$4,300.00
Equipment Depreciation	$23,000 + $3.70*8000	$52,600.00
Factory Rent		$8,400.00
Property Taxes		$2,100.00
Factory Administration	$11,700 + $1.90*8000	$26,900.00
Total Expense		$254,500.00

Solution 2:

Packaging Solutions Corporation
Production Department Flexible Budget
For the month ended March 31
Particulars	Details	Amount
Direct labor hours		8400
Direct labor	8400*$15.80	$132,720.00
Indirect labor	$8,200 + $1.60*8400	$21,640.00
Utilities	$6,400 + $0.80*8400	$13,120.00
Supplies	$1,100 + $0.40*8400	$4,460.00
Equipment Depreciation	$23,000 + $3.70*8400	$54,080.00
Factory Rent		$8,400.00
Property Taxes		$2,100.00
Factory Administration	$11,700 + $1.90*8400	$27,660.00
Total Expense		$264,180.00

Solution 3:

Packagining Solution Corporation
Spending Variances
For the month ended March 31
Particulars	Actual results	Spending Variance		Flexible Budget
Nos of units	4200			4200
Direct labor	$134,730.00	$2,010.00	U	$132,720.00
Indirect labor	$19,860.00	$1,780.00	F	$21,640.00
Utilities	$14,570.00	$1,450.00	U	$13,120.00
Supplies	$4,980.00	$520.00	U	$4,460.00
Equipment Depreciation	$54,080.00	$0.00	None	$54,080.00
Factory Rent	$8,700.00	$300.00	U	$8,400.00
Property Taxes	$2,100.00	$0.00	None	$2,100.00
Factory Administration	$26,470.00	$1,190.00	F	$27,660.00
Total expenses	$265,490.00	$1,310.00	U	$264,180.00