Question

Packaging Solutions Corporation manufactures and a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget an lexible budget for the Production Department are based on the following formulas, where is 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 $15.80 $8,200 + $1.600 $6,400 + $0.80 $1,100 + $0.40 $23,000 - $3.789 $8.400 $2,100 $11,700 + $1.909 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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Actual Cost Incurred in March $134,730 $ 19,860 $ 14,570 $ 4,90 $ 54,00 $ 8.700 $ 2.100 $26.470

Answer 1

1
Planning Budget
Budgeted labor hours	8000
Direct labor	126400	=8000*15.8
Indirect labor	21000	=8200+(8000*1.6)
Utilities	12800	=6400+(8000*0.8)
Supplies	4300	=1100+(8000*0.4)
Equipment Depreciation	52600	=23000+(8000*3.7)
Factory rent	8400
Property taxes	2100
Factory administration	26900	=11700+(8000*1.9)
Total expenses	254500
2
Flexible Budget
Actual labor hours	8400
Direct labor	132720	=8400*15.8
Indirect labor	21640	=8200+(8400*1.6)
Utilities	13120	=6400+(8400*0.8)
Supplies	4460	=1100+(8400*0.4)
Equipment Depreciation	54080	=23000+(8400*3.7)
Factory rent	8400
Property taxes	2100
Factory administration	27660	=11700+(8400*1.9)
Total expenses	264180
3
	Actual	Spending variances		Flexible budget
Labor hours	8400			8400
Direct labor	134730	2010	U	132720
Indirect labor	19860	1780	F	21640
Utilities	14570	1450	U	13120
Supplies	4980	520	U	4460
Equipment Depreciation	54080	0	None	54080
Factory rent	8700	300	U	8400
Property taxes	2100	0	None	2100
Factory administration	26470	1190	F	27660
Total expenses	265490	1310	U	264180