Triway Packaging 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 direct labor-hours worked in a month:
| |
| Direct labor |
|
|
|
$ |
16.20 |
q |
| Indirect labor |
$ |
4,700 |
+ |
$ |
2.10 |
q |
| Utilities |
$ |
5,800 |
+ |
$ |
0.40 |
q |
| Supplies |
$ |
1,600 |
+ |
$ |
0.40 |
q |
| Equipment depreciation |
$ |
18,500 |
+ |
$ |
3.10 |
q |
| Factory rent |
|
|
|
$ |
8,300 |
|
| Property taxes |
|
|
|
$ |
2,600 |
|
| Factory administration |
$ |
13,400 |
+ |
$ |
0.70 |
q |
|
|
The actual costs incurred in November in the Production Department are listed below:
|
|
Actual Cost Incurred
in November |
| Direct labor |
$ |
67,980 |
| Indirect labor |
$ |
12,910 |
| Utilities |
$ |
7,910 |
| Supplies |
$ |
3,530 |
| Equipment depreciation |
$ |
31,210 |
| Factory rent |
$ |
8,700 |
| Property taxes |
$ |
2,600 |
| Factory administration |
$ |
15,640 |
|
| Required: |
| 1. |
The company had budgeted for an activity level of 4,300 labor-hours in November. Prepare the Production Department's planning budget for the month.
|
| 2. |
The company actually worked 4,100 labor-hours in November. Prepare the Production Department's flexible budget for the month.
|
| 3. |
Calculate the spending variances for all expense items. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
|