Question

Exercise 8-16 Flexible Budgets in a Cost Center [LO8-1, LO8-2] Packaging Solutions Corporation manufactures and sells...

Exercise 8-16 Flexible Budgets in a Cost Center [LO8-1, LO8-2]

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 $ 16.20 q
  Indirect labor $ 4,500 + $ 1.60 q
  Utilities $ 5,400 + $ 0.40 q
  Supplies $ 1,400 + $ 0.40 q
  Equipment depreciation $ 18,800 + $ 2.40 q
  Factory rent $ 8,600
  Property taxes $ 2,600
  Factory administration $ 13,200 + $ 0.60 q

  

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

  

Actual Cost Incurred in March
  Direct labor $ 63,120
  Indirect labor $ 10,080
  Utilities $ 7,390
  Supplies $ 3,210
  Equipment depreciation $ 27,920
  Factory rent $ 9,000
  Property taxes $ 2,600
  Factory administration $ 14,830
Required:
1.

The company had budgeted for an activity level of 4,000 labor-hours in March. Complete the Production Department’s planning budget for the month.

     

2.

The company actually worked 3,800 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.)

     

Homework Answers

Answer #1

1. Planning Budget for the month of March for a budgeted activity level of 4,000 labor-hours is as follows:

The above numbers are calculated by placing 4,000 hours in the place of 'q' given in the question.

2. Flexible Budget for the month of March for actual worked 3,800 labor hours is as follows:

The above numbers are calculated by placing 3,800 hours in the place of 'q' given in the question.

3. Spending Variance:

Spending variance is the difference between the amounts in flexible budget and the actual amount incurred, the above table shows the spending variance.

Few expenses are having adverse variance, while few are with a favorable variance and few with no variance.

.

Hope it is helpful!!

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $16.20q Indirect labor $4,700 + $2.10q Utilities $5,400 + $0.50q Supplies $1,800 + $0.40q Equipment depreciation $18,400 + $2.50q Factory rent $8,200 Property taxes $2,700 Factory administration $13,300 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $ 16.10 q Indirect labor $ 4,200 + $ 1.60 q Utilities $ 5,600 + $ 0.30 q Supplies $ 1,600 + $ 0.20 q Equipment depreciation $ 18,500 + $...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 + $ 1.40 q   Utilities $ 5,300 + $ 0.80 q   Supplies $ 1,200 + $ 0.30 q   Equipment depreciation $ 18,800 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $ 16.40 q   Indirect labor $ 4,100 + $ 2.00 q   Utilities $ 5,300 + $ 0.70 q   Supplies $ 1,600 + $ 0.30 q   Equipment depreciation $ 18,200 +...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
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 $16.60q Indirect Labor 4700+2.00q Utilities 5300+0.80q Supplies 1300+0.20q Equipment depreciation 18700+3.10q Factory Rent 8300 Property Taxes 2700 Factory Administration 13300+0.80q The actual costs incurred in March in the Production Department are...
Ray Company provided the following excerpts from its Production Department’s flexible budget performance report. Required: Complete...
Ray Company provided the following excerpts from its Production Department’s flexible budget performance report. Required: Complete the Production Department’s Flexible Budget Performance Report. (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. Round "rate per hour" answers to 2 decimal places.) Ray Company Production Department Flexible Budget Performance Report For the Month Ended August 31 Actual Results Spending Variances Flexible Budget...
Ray Company provided the following excerpts from its Production Department’s flexible budget performance report. (Round "rate...
Ray Company provided the following excerpts from its Production Department’s flexible budget performance report. (Round "rate per hour" answers to 2 decimal places. 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.) Required: Complete the Production Department’s Flexible Budget Performance Report. Ray Company Production Department Flexible Budget Performance Report For the Month Ended August 31 Actual Results Spending Variances Flexible Budget...
Problem 8-23A Flexible Budgets and Spending Variances [LO8-1, LO8-2] You have just been hired by FAB...
Problem 8-23A Flexible Budgets and Spending Variances [LO8-1, LO8-2] You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in...
Ray Company provided the following excerpts from its Production Department’s flexible budget performance report. (Round "rate...
Ray Company provided the following excerpts from its Production Department’s flexible budget performance report. (Round "rate per hour" answers to 2 decimal places. 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.) Ray Company Production Department Flexible Budget Performance Report For the Month Ended August 31 Actual Results Spending Variances Flexible Budget Activity Variances Planning Budget Labor-hours (q) 9,570 9,090 Direct...
Ray Company provided the following excerpts from its Production Department’s flexible budget performance report. (Round "rate...
Ray Company provided the following excerpts from its Production Department’s flexible budget performance report. (Round "rate per hour" answers to 2 decimal places. 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.) Ray Company Production Department Flexible Budget Performance Report For the Month Ended August 31 Actual Results Spending Variances Flexible Budget Activity Variances Planning Budget Labor-hours (q) 9,600 9,120 Direct...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT