FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 | $4,100 + $1.60q |
Utilities | $5,100 + $0.70q |
Supplies | $1,200 + $0.40q |
Equipment |
$18,000 + $2.50q |
Factory rent | $8,500 |
Property taxes | $3,000 |
Factory administration | $13,500 + $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 | $ 70,920 |
Indirect labor | $ 10,320 |
Utilities | $ 8,570 |
Supplies | $ 3,170 |
Equipment depreciation | $ 28,500 |
Factory rent | $ 8,900 |
Property taxes | $ 3,000 |
Factory administration | $ 16,250 |
Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.
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