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 + $0.80q |
The Production Department planned to work 4,100 labor-hours in March; however, it actually worked 3,900 labor-hours during the month. Its actual costs incurred in March are listed below:
| Actual Cost Incurred in March | |||
| Direct labor | $ | 65,970 | |
| Indirect labor | $ | 11,680 | |
| Utilities | $ | 6,720 | |
| Supplies | $ | 2,020 | |
| Equipment depreciation | $ | 28,150 | |
| Factory rent | $ | 8,700 | |
| Property taxes | $ | 2,600 | |
| Factory administration | $ | 15,910 | |
Required:
1. Prepare the Production Department’s planning budget for the month.
2. Prepare the Production Department’s flexible budget for the month.
3. Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.
Answers
|
WORKING COLUMNS |
Planning Static Budget |
||||||
|
Labor hours |
4,100 |
||||||
|
Expenses: |
|||||||
|
Direct Labor |
( |
$ - |
) |
$ 16.50 |
4100 |
$ 67,650.00 |
|
|
Indirect Labor |
( |
$ 4,300.00 |
) |
$ 2.00 |
4100 |
) |
$ 12,500.00 |
|
Utilities |
( |
$ 5,100.00 |
+ |
$ 0.30 |
4100 |
) |
$ 6,330.00 |
|
Supplies |
( |
$ 1,400.00 |
+ |
$ 0.10 |
4100 |
) |
$ 1,810.00 |
|
Equipment Depreciation |
( |
$ 18,400.00 |
+ |
$ 2.50 |
4100 |
$ 28,650.00 |
|
|
Factory Rent |
( |
$ 8,300.00 |
) |
$ - |
4100 |
$ 8,300.00 |
|
|
Property Taxes |
( |
$ 2,600.00 |
) |
$ - |
4100 |
$ 2,600.00 |
|
|
Factory Administration |
( |
$ 13,400.00 |
) |
$ 0.80 |
4100 |
$ 16,680.00 |
|
|
Total Expenses |
$ 53,500.00 |
$ 22.20 |
$ 144,520.00 |
||||
|
WORKING COLUMNS |
Flexible Budget |
||||||
|
Labor hours |
3,900 |
||||||
|
Expenses: |
|||||||
|
Direct Labor |
( |
$ - |
) |
$ 16.50 |
x 3900 |
$ 64,350.00 |
|
|
Indirect Labor |
( |
$ 4,300.00 |
) |
$ 2.00 |
x 3900 |
) |
$ 12,100.00 |
|
Utilities |
( |
$ 5,100.00 |
+ |
$ 0.30 |
x 3900 |
) |
$ 6,270.00 |
|
Supplies |
( |
$ 1,400.00 |
+ |
$ 0.10 |
x 3900 |
) |
$ 1,790.00 |
|
Equipment Depreciation |
( |
$ 18,400.00 |
+ |
$ 2.50 |
x 3900 |
$ 28,150.00 |
|
|
Factory Rent |
( |
$ 8,300.00 |
) |
$ - |
x 3900 |
$ 8,300.00 |
|
|
Property Taxes |
( |
$ 2,600.00 |
) |
$ - |
x 3900 |
$ 2,600.00 |
|
|
Factory Administration |
( |
$ 13,400.00 |
) |
$ 0.80 |
x 3900 |
$ 16,520.00 |
|
|
Total Expenses |
$ 53,500.00 |
$ 22.20 |
$ 140,080.00 |
||||
|
Actual Result |
Revenue & Spending Variance |
Flexible Budget |
Activity variance |
Planning Static Budget |
|||
|
Labor hours |
3,900 |
3,900 |
4,100 |
||||
|
Expenses: |
|||||||
|
Direct Labor |
$ 65,970.00 |
$ 1,620.00 |
U |
$ 64,350.00 |
$ 3,300.00 |
F |
$ 67,650.00 |
|
Indirect Labor |
$ 11,680.00 |
$ 420.00 |
F |
$ 12,100.00 |
$ 400.00 |
F |
$ 12,500.00 |
|
Utilities |
$ 6,720.00 |
$ 450.00 |
U |
$ 6,270.00 |
$ 60.00 |
F |
$ 6,330.00 |
|
Supplies |
$ 2,020.00 |
$ 230.00 |
U |
$ 1,790.00 |
$ 20.00 |
F |
$ 1,810.00 |
|
Equipment Depreciation |
$ 28,150.00 |
$ - |
N |
$ 28,150.00 |
$ 500.00 |
F |
$ 28,650.00 |
|
Factory Rent |
$ 8,700.00 |
$ 400.00 |
U |
$ 8,300.00 |
$ - |
None |
$ 8,300.00 |
|
Property Taxes |
$ 2,600.00 |
$ - |
N |
$ 2,600.00 |
$ - |
None |
$ 2,600.00 |
|
Factory Administration |
$ 15,910.00 |
$ 610.00 |
F |
$ 16,520.00 |
$ 160.00 |
F |
$ 16,680.00 |
|
Total Expenses |
$ 141,750.00 |
$ 1,670.00 |
U |
$ 140,080.00 |
$ 4,440.00 |
F |
$ 144,520.00 |
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are pre...
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 $16.10q 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 $5,400 + $0.70q Supplies $1,400 + $0.20q Equipment depreciation $18,400 + $2.80q 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 $4,000 + $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 $16.40q 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 +...
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 $4,500 + $2.00q Utilities $5,400 + $0.40q Supplies $1,300 + $0.20q Equipment depreciation $18,800 + $2.90q Factory rent $8,600 Property taxes $2,500 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 $16.10q Indirect labor $4,800 + $1.50q Utilities $5,500 + $0.70q Supplies $1,700 + $0.20q Equipment depreciation $18,600 + $2.70q 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 $4,600 + $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 +...
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 $4,500 + $2.10q Utilities $5,100 + $0.70q Supplies $1,800 + $0.20q Equipment depreciation $18,800 + $2.60q Factory rent $8,000 Property taxes $3,000 Factory administration $13,300 +...