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Exercise 9-15 Flexible Budget Performance Report in a Cost Center [LO9-1, LO9-4]

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				$	16.30	q
Indirect labor	$	4,600	+	$	2.00	q
Utilities	$	5,100	+	$	0.80	q
Supplies	$	1,800	+	$	0.30	q
Equipment depreciation	$	18,800	+	$	2.60	q
Factory rent				$	8,300
Property taxes				$	2,500
Factory administration	$	13,600	+	$	0.60	q

The actual costs incurred in March in the Production Department are listed below:

	Actual Cost Incurred in March
Direct labor	$	65,150
Indirect labor	$	11,980
Utilities	$	8,770
Supplies	$	3,240
Equipment depreciation	$	28,940
Factory rent	$	8,700
Property taxes	$	2,500
Factory administration	$	15,290

Required:
1.	The company had budgeted for an activity level of 4,100 labor-hours in March. Complete the Production Departments planning budget for the month.

2.	The company actually worked 3,900 labor-hours in March. Complete the Production Departments flexible budget for the month.

3.	Complete the Production Departments flexible budget performance report for March, including both the spending and activity variances. (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.)

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