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 gis the number of labor-hours worked in a month: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Cost Formulas $16.309 $4,200 + $2.000 $5,500 + $0.500 $1,600 + $0.200 $18,200 + $2.500 $8,500 $2,500 $13,200 + $0.504 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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Actual Cost Incurred in March $ 68,410 $ 11,980 $ 8,040 $ 2,670 $28,450 $ 8,900 $ 2,500 $ 14,580

Answer 1

Required Budgets are as prepared below:

1.

Packaging Solutions Corporation
Production Department Planning Budget
For the Month Ended march 31
Particulars			Planning Budget
Labour hours			4,300
Direct Labour	16.3q		70,090
Indirect labour	4,200+2.0q		12,800
Utilities	5,500+.5q		7,650
Supplies	1,600+.2q		2,460
Equipment dep	18,200+2.5q		28,950
Factory Rent	8,500		8,500
Property taxes	2,500		2,500
Factory administration	13,200+.5q		15,350
Total expense			148,300

2.

Packaging Solutions Corporation
Production Department Flexible Budget
For the Month Ended march 31
Particulars			Flexible Budget
Labour hours			4,100
Direct Labour		16.3q	66,830
Indirect labour		4,200+2.0q	12,400
Utilities		5,500+.5q	7,550
Supplies		1,600+.2q	2,420
Equipment dep		18,200+2.5q	28,450
Factory Rent		8,500	8,500
Property taxes		2,500	2,500
Factory administration		13,200+.5q	15,250
Total expense			143,900

3.

Packaging Solutions Corporation
Spending variances
For the Month Ended march 31
Particulars	Actual		Flexible Budget		Spending variance
Labour hours	4,100		4,100
Direct Labour	68,410		66,830		1,580	U
Indirect labour	11,980		12,400		-420	F
Utilities	8,040		7,550		490	U
Supplies	2,670		2,420		250	U
Equipment dep	28,450		28,450		0	None
Factory Rent	8,900		8,500		400	U
Property taxes	2,500		2,500		0	None
Factory administration	14,580		15,250		-670	F
Total expense	145,530		143,900		1,630	U