Reference no: EM132515547

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 $4,400 + $1.80q

Utilities $5,300 + $0.60q

Supplies $1,500 + $0.30q

Equipment depreciation $18,600 + $3.10q

Factory rent $8,400

Property taxes $2,500

Factory administration $13,700 + $0.80q

The Production Department planned to work 4,400 labor-hours in March; however, it actually worked 4,200 labor-hours during the month. Its actual costs incurred in March are listed below:

Actual Cost

Incurred in March

Direct labor                $70,480

Indirect labor              $11,500

Utilities                       $8,330

Supplies                       $3,030

Equipment depreciation    $31,620

Factory rent                    $8,800

Property taxes                   $2,500

Factory administration           $16,450

Required:

Question 1. Prepare the Production Department's planning budget for the month.

Question 2. Prepare the Production Department's flexible budget for the month.

Question 3. Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances.