Packaging Solutions Corporation manufactures and sells a wid

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 Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration $16.10g $4,600 $1.70q $5,000 $0.70g $1,700 $0.30q $18,200 $2.80q $8,600 $2,600 $13,000 + $0.50g 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: Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Actual Cost Incurred in March 69,160 11,260 $ 8,470 $ 3,230 $ 29,960 $ 9,000 $ 2,600 $ 14,430

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A spending variance is the difference between the actual and expected (or budgeted) amount of an expense..

Activity Variance is the difference between a revenue or cost item in the static planning budget and the same item in the flexible budget. An Activity Variance is due solely to the difference between the level of activity assumed in the planning budget and the actual level of activity used in the flexible budget.

Packaging Solutions Corporation
Production Department Planning Budget
For the month ended March 31
	Formulae
Planned Labour Hours (q)		4400
Direct Labor	16.10q=16.10*4400	70840
Indirect Labor	$4600+1.70q=$4600+(1.7*4400)	12080
Utilities	$5000+0.70q=$5000+(0.7*4400)	8580
Supplies	$1700+0.30q=$1700+(0.3*4400)	3020
Equipment Depreciation	$18200+2.80q=$18200+(2.8*4400)	30520
Factory Rent		8600
Property Taxes		2600
Factory Administration	$13000+0.50q=$13000+(0.5*4400)	15200
Total Expense		151440