Acompany manufactures and sells a wide variety of 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 laborhours worked in a month:
Cost Formulas
Direct labor $q
Indirect labor $ $q
Utilities $ $q
Supplies $ $q
Equipment depreciation $ $q
Factory rent $
Property taxes $
Factory administration $ $q
The Production Department planned to work laborhours in March; however, it actually worked laborhours during the month. Its actual costs incurred in March are listed below:
Actual Cost Incurred in March
Direct labor $
Indirect labor $
Utilities $
Supplies $
Equipment depreciation $
Factory rent $
Property taxes $
Factory administration $
Required:
Prepare the Production Departments flexible budget performance report for March, including both the spending and activity variances.
