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 | |
Direct labor | $16.40q |
Indirect labor | $4,100 + $1.50q |
Utilities | $5,200 + $0.60q |
Supplies | $1,600 + $0.30q |
Equipment depreciation | $18,200 + $2.50q |
Factory rent | $8,200 |
Property taxes | $2,500 |
Factory administration | $13,500 + $0.60q |
The Production Department planned to work 4,300 labor-hours in March; however, it actually worked 4,100 labor-hours during the month. Its actual costs incurred in March are listed below:
Actual Cost Incurred in March | |||
Direct labor | $ | 68,840 | |
Indirect labor | $ | 9,730 | |
Utilities | $ | 8,170 | |
Supplies | $ | 3,100 | |
Equipment depreciation | $ | 28,450 | |
Factory rent | $ | 8,600 | |
Property taxes | $ | 2,500 | |
Factory administration | $ | 15,310 | |
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 all expense items.
1 | |||||||
Planning Budget | |||||||
Budgeted labor hours | 4300 | ||||||
Direct labor | 70520 | =4200*16.5 | |||||
Indirect labor | 10550 | =4100+(4300*1.5) | |||||
Utilities | 7780 | =5200+(4300*0.6) | |||||
Supplies | 2890 | =1600+(4300*0.3) | |||||
Equipment Depreciation | 28950 | =18200+(4300*2.5) | |||||
Factory rent | 8200 | ||||||
Property taxes | 2500 | ||||||
Factory administration | 16080 | =13500+(4300*0.6) | |||||
Total expenses | 147470 | ||||||
2 | |||||||
Flexible Budget | |||||||
Actual labor hours | 4100 | ||||||
Direct labor | 67240 | =4100*16.4 | |||||
Indirect labor | 10250 | =4100+(4100*1.5) | |||||
Utilities | 7660 | =5200+(4100*0.6) | |||||
Supplies | 2830 | =1600+(4100*0.3) | |||||
Equipment Depreciation | 28450 | =18200+(4100*2.5) | |||||
Factory rent | 8200 | ||||||
Property taxes | 2500 | ||||||
Factory administration | 15960 | =13500+(4100*0.6) | |||||
Total expenses | 143090 | ||||||
3 | |||||||
Actual | Spending variance | Flexible budget | Activity variance | Planning budget | |||
Labor hours | 4100 | 4100 | 4300 | ||||
Direct labor | 68840 | 1600 | U | 67240 | 3280 | F | 70520 |
Indirect labor | 9730 | 520 | F | 10250 | 300 | F | 10550 |
Utilities | 8170 | 510 | U | 7660 | 120 | F | 7780 |
Supplies | 3100 | 270 | U | 2830 | 60 | F | 2890 |
Equipment Depreciation | 28450 | 0 | None | 28450 | 500 | F | 28950 |
Factory rent | 8600 | 400 | U | 8200 | 0 | None | 8200 |
Property taxes | 2500 | 0 | None | 2500 | 0 | None | 2500 |
Factory administration | 15310 | 650 | F | 15960 | 120 | F | 16080 |
Total expenses | 144700 | 1610 | U | 143090 | 4380 | F | 147470 |
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 Direct labor $16.60q Indirect labor $4,400 + $1.50q Utilities $5,700 + $0.70q Supplies $1,400 + $0.40q Equipment depreciation $18,700 + $2.40q Factory rent $8,100 Property taxes $2,600 Factory administration $13,700 +...
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 Direct labor $16.50q Indirect labor $4,000 + $1.40q Utilities $5,000 + $0.60q Supplies $1,200 + $0.30q Equipment depreciation $18,100 + $2.90q Factory rent $8,600 Property taxes $2,800 Factory administration $13,100 +...
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 Direct labor $16.10q Indirect labor $4,300 + $1.70q Utilities $5,400 + $0.80q Supplies $1,300 + $0.20q Equipment depreciation $18,600 + $2.50q Factory rent $8,100 Property taxes $2,600 Factory administration $13,600 +...
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 Direct labor $16.50q Indirect labor $4,300 + $2.00q Utilities $5,100 + $0.30q Supplies $1,400 + $0.10q Equipment depreciation $18,400 + $2.50q Factory rent $8,300 Property taxes $2,600 Factory administration $13,400 +...
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 Direct labor $16.30q Indirect labor $4,600 + $1.50q Utilities $5,500 + $0.80q Supplies $1,300 + $0.10q Equipment depreciation $18,300 + $2.80q Factory rent $8,200 Property taxes $2,700 Factory administration $13,300 +...
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 Direct labor $16.50q Indirect labor $4,800 + $2.00q Utilities $5,600 + $0.60q Supplies $1,300 + $0.20q Equipment depreciation $18,500 + $2.60q Factory rent $8,200 Property taxes $2,600 Factory administration $13,100 +...
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 Direct labor $16.50q Indirect labor $4,700 + $1.30q Utilities $5,200 + $0.60q Supplies $1,700 + $0.20q Equipment depreciation $18,700 + $2.60q Factory rent $8,500 Property taxes $2,900 Factory administration $13,500 +...
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 Direct labor $16.30q Indirect labor $4,800 + $1.90q Utilities $5,100 + $0.80q Supplies $1,600 + $0.20q Equipment depreciation $18,200 + $2.60q Factory rent $8,300 Property taxes $2,500 Factory administration $13,700 +...
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
Direct labor
$16.40q
Indirect labor
$4,300 + $1.50q
Utilities
$5,800 + $0.50q
Supplies
$1,700 + $0.10q
Equipment depreciation
$18,000 + $2.40q
Factory rent
$8,000
Property taxes
$2,500
Factory administration
$13,700 +...
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 Direct labor $16.50q Indirect labor $4,600 + $2.00q Utilities $5,700 + $0.60q Supplies $1,600 + $0.20q Equipment depreciation $18,700 + $3.00q Factory rent $8,600 Property taxes $3,000 Factory administration $13,400 +...