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Question 10:

Required: Prepare the company's flexible budget for August. Lavage Rapide Flexible Budget For the Month Ended August 31 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense 0 Net operating income 0 Exercise 9-8 (Algo) Flexible Budget (LO9-1] Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company's costs: Cost per Fixed Cost per Month $ 1,000 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Car Washed $ 0.50 $ 0.09 $ 0.15 $ 0.30 $ 4,200 $ 8,500 $ 2,000 $ 1,600 $ 0.05 For example, electricity costs are $1,000 per month plus $0.09 per car washed. The company actually washed 8,500 cars in August and collected an average of $6.10 per car washed. Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows: Standard Hours 24 minutes Standard Rate Standard per Hour Cost $5.40 $2.16 During August, 8,550 hours of direct labor time were needed to make 19,900 units of the Jogging Mate. The direct labor cost totaled $45,315 for the month. Required: 1. What is the standard labor-hours allowed (SH) to makes 19,900 Jogging Mates? 2. What is the standard labor cost allowed (SH SR) to make 19,900 Jogging Mates? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance? 5. The budgeted variable manufacturing overhead rate is $4.50 per direct labor-hour. During August, the company incurred $46,170 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month. (For requirements 3 through 5, 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. Do not round intermediate calculations.) 1. Standard labor-hours allowed 2. Standard labor cost allowed 3. Labor spending variance 4. Labor rate variance 4. Labor efficiency variance 5. Variable overhead rate variance 5. Variable overhead efficiency variance 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 Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Cost Formulas $16.500 $4,600 + $1.809 $5,100 + $0.909 $1,400 + $0.209 $18, 100 + $ 2.809 $ 8,500 $2,500 $13,300 + $0.909 The Production Department planned to work 4,100 labor-hours in March; however, it actually worked 3,900 labor-hours during the month. Its actual costs incurred in March are listed below: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Actual Cost Incurred in March $ 65,970 $ 11,160 $ 9,180 $ 2,430 $ 29,020 $ 8,900 $ 2,500 $ 16,220 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the Production Department's planning budget for the month. Packaging Solutions Corporation Production Department Planning Budget For the Month Ended March 31 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense $ 0