Managerial Accounting: E10-18 Packaging Solutions Corporation manufactures and sells a wide

Managerial Accounting 
E10-18 Flexible Performance Report in a Cost Center 
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 $16.50q 
Indirect labor $4,200 + $1.80q 
Utilities $5,400 + $0.80q 
Supplies $1,600 + $0.30q 
Equipment depreciation $18,400 + $2.60q 
Factory rent 8,100 
Property taxes 2,400 
Factory administration $13,800 + $0.90q 

The actual costs incurred in March in the Production Department are listed below: 
Actual Cost Incurred in March 
Direct labor 70,920 
Indirect labor 11,300 
Utilities 9,310 
Supplies 3,130 
Equipment depreciation 29,320 
Factory rent 8,500 
Property taxes 2,400 
Factory administration 16,990 

Required: 
1. The company had budgeted for an activity level of 4,400 labor-hours in March. Complete the Production Department’s planning budget for the month. 
2. The company actually worked 4,200 labor-hours in March. Complete the Production Department’s flexible budget for the month. 
3. Calculate the spending variances for all expense items. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) 
4. What aspects of the flexible budget performance report should be brought to management's attention? Explain.
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