Packaging Solutions Corporation manufactures and sells a wide varlety 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 qis the number of labor-hours worked in a month: Cost Formulas Direct labor Indirect labor Utilities Supplies Equipnent depreciation Factory rent Property taxes Factory adeinistration $16. 60g $4, 200 $1.60g $5,300+ $0.70g $1,700 + $0.30g $18, 500. $2.90g $8,300 $2,500 $13,100 s0.80g The Production Department planned to work 4,100 labor-hours in March: however, it actually worked 3,900 labor-hours during the month. Its actual costs incurred in March are listed below: Actual Cost Incurred in March $ 66, 380 $ 9,940 $ 8,560 $ 3,140 $ 29,810 $ 8,700 $ 2,500 $ 15,610 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Required: 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 varlances for all expense items.

Packaging Solutions Corporation manufactures and sells a wide varlety 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 qis the number of labor-hours worked in a month: Cost Formulas Direct labor Indirect labor Utilities Supplies Equipnent depreciation Factory rent Property taxes Factory adeinistration $16. 60g $4, 200 $1.60g $5,300+ $0.70g $1,700 + $0.30g $18, 500. $2.90g $8,300 $2,500 $13,100 s0.80g The Production Department planned to work 4,100 labor-hours in March: however, it actually worked 3,900 labor-hours during the month. Its actual costs incurred in March are listed below: Actual Cost Incurred in March $ 66, 380 $ 9,940 $ 8,560 $ 3,140 $ 29,810 $ 8,700 $ 2,500 $ 15,610 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Required: 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 varlances for all expense items.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 63E: Use the following information for Exercises 9-63 and 9-64: Palladium Inc. produces a variety of...

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Salisbury Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows: At the beginning of March, Salisburys management planned to produce 500,000 bottles. The actual number of bottles produced for March was 525,000 bottles. The actual costs for March of the current year were as follows: a. Prepare the March manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for Salisbury, assuming planned production. b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for March. c. Interpret the budget performance report.
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