Exercise $9-16($Algo$)$ Flexible Budgets in a Cost Center $[$LO$9-1,$ LO$9-2]$

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:

Cost Formulas

Direct labor $$16\mathrm{.}40$q

Indirect labor $$4,200+$ $$1\mathrm{.}80$q

Utilities $$5,400+$ $$0\mathrm{.}50$q

Supplies $$1,700+$ $$0\mathrm{.}30$q

Equipment depreciation $$18,200+$ $$2\mathrm{.}60$q

Factory rent $$8,600$

Property taxes $$2,700$

Factory administration $$13,600+$ $$0\mathrm{.}70$q

The Production Department planned to work $4,400$ labor$-$hours in March; however, it actually worked $4,200$ labor$-$hours during the month. Its actual costs incurred in March are listed below:

Actual Cost Incurred in March

Direct labor $ $70,480$

Indirect labor $ $11,300$

Utilities $ $7,990$

Supplies $ $3,230$

Equipment depreciation $ $29,120$

Factory rent $ $9,000$

Property taxes $ $2,700$

Factory administration $ $15,910$

Required:

$1.$ Prepare the Production Department$$s planning budget for the month.

$2.$ Prepare the Production Department$$s flexible budget for the month.

$3.$ Calculate the spending variances for all expense items.