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 |
$13.80q |
| Indirect labor |
$7,800 + $1.60q |
| Utilities |
$8,300 + $0.70q |
| Supplies |
$900 + $0.30q |
| Equipment depreciation |
$21,600 + $2.00q |
| Factory rent |
$7,000 |
| Property taxes |
$1,220 |
| Factory administration |
$11,700 + $1.90q |
|
| The actual costs incurred in March in the Production Department are listed below: |
|
Actual Cost
Incurred in March |
| Direct labor |
$132,730 |
| Indirect labor |
$19,660 |
| Utilities |
$16,070 |
| Supplies |
$5,100 |
| Equipment depreciation |
$40,200 |
| Factory rent |
$7,500 |
| Property taxes |
$1,220 |
| Factory administration |
$19,270 |
|