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: Direct labor Indirect labor Utilities Cost Formulas $16.60q $4,600 +$1.409 $5,700 + $0.50q Supplies $1,500 + $0.20q Equipment depreciation $18,100 + $2.809 Factory rent $8,200 Property taxes Factory administration $2,900 $13,400 + $0.709 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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Required: Actual Cost Incurred in March $ 71,360 $ 9,940 $ 8,290 $ 2,590 $ 29,860 $ 8,600 $ 2,900 $ 15,710 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.
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: Direct labor Indirect labor Utilities Cost Formulas $16.60q $4,600 +$1.409 $5,700 + $0.50q Supplies $1,500 + $0.20q Equipment depreciation $18,100 + $2.809 Factory rent $8,200 Property taxes Factory administration $2,900 $13,400 + $0.709 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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Required: Actual Cost Incurred in March $ 71,360 $ 9,940 $ 8,290 $ 2,590 $ 29,860 $ 8,600 $ 2,900 $ 15,710 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.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter7: The Master Budget And Flexible Budgeting
Section: Chapter Questions
Problem 10P
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A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
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A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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![Exercise 9-16 (Algo) Flexible Budgets in a Cost Center [LO9-1, LO9-2]
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:
Direct labor
Indirect labor
Utilities
Cost Formulas
$16.609
$4,600 +$1.409
$5,700 + $0.509
Supplies
$1,500 + $0.209
Equipment depreciation.
$18,100 + $2.809
Factory rent
$8,200
Property taxes
$2,900
Factory administration
$13,400 + $0.709
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:
Direct labor
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
Required:
Actual Cost
Incurred in
March
$ 71,360
$ 9,940
$ 8,290
$ 2,590
$ 29,860
$ 8,600
$ 2,900
$ 15,710
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F454fe359-f685-4383-90c4-bca9213b2f7b%2F576a7422-0f0e-4d1c-b6ae-97d5c8dff5b6%2Fje72psb_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 9-16 (Algo) Flexible Budgets in a Cost Center [LO9-1, LO9-2]
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:
Direct labor
Indirect labor
Utilities
Cost Formulas
$16.609
$4,600 +$1.409
$5,700 + $0.509
Supplies
$1,500 + $0.209
Equipment depreciation.
$18,100 + $2.809
Factory rent
$8,200
Property taxes
$2,900
Factory administration
$13,400 + $0.709
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:
Direct labor
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
Required:
Actual Cost
Incurred in
March
$ 71,360
$ 9,940
$ 8,290
$ 2,590
$ 29,860
$ 8,600
$ 2,900
$ 15,710
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.
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