Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production
Fantastic news! We've Found the answer you've been seeking!
Question:
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 | $4,300 + $1.50q |
Utilities | $5,300 + $0.90q |
Supplies | $1,400 + $0.40q |
Equipment depreciation | $18,400 + $2.80q |
Factory rent | $8,300 |
Property taxes | $3,000 |
Factory administration | $13,500 + $0.90q |
The Production Department planned to work 4,500 labor-hours in March; however, it actually worked 4,300 labor-hours during the month. Its actual costs incurred in March are listed below:
Actual Cost Incurred in March | |
---|---|
Direct labor | $ 71,220 |
Indirect labor | $ 10,230 |
Utilities | $ 9,740 |
Supplies | $ 3,410 |
Equipment depreciation | $ 30,440 |
Factory rent | $ 8,700 |
Property taxes | $ 3,000 |
Factory administration | $ 16,780 |
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.
Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
Posted Date: