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 depreciation $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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 depreciation $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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