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EXERCISE 9 19 Flexible Budget Performance Report in a Cost Center LO1 LO4 Triway Packaging Corporation manufactures and sells a wide variety of packaging products Performance reports are

EXERCISE 9–19 Flexible Budget Performance Report in a Cost Center [LO1, LO4]

Triway Packaging Corporation manufactures and sells a wide variety of packaging products. Per- formance reports are prepared monthly for each department. The planning budget and flexible

 

 

 

 

budget for the Production Department are based on the following formulas, where is the number of direct labor-hours worked in a month:

 

 

The actual costs incurred in November in the Production Department are listed below:

 

 

Actual Cost Incurred in November

Direct labor . . . . . . . . . . . . . . . . . . . . .

$63,520

Indirect labor. . . . . . . . . . . . . . . . . . . .

$10,680

Utilities . . . . . . . . . . . . . . . . . . . . . . . . .

$8,790

Supplies . . . . . . . . . . . . . . . . . . . . . . .

$2,810

Equipment depreciation . . . . . . . . . . . .

$29,240

Factory rent . . . . . . . . . . . . . . . . . . . .

$8,700

Property taxes . . . . . . . . . . . . . . . . . .

$2,800

Factory administration . . . . . . . . . . . . .

$16,230

 

Required:

1.       The company had budgeted for an activity level of 4,000 labor-hours in November. Prepare the Production Department’s planning budget for the month.

2.       The company actually worked 3,800 labor-hours in November. Prepare the Production Depart- ment’s flexible budget for the month.

3.       Prepare the Production Department’s flexible budget performance report for November, including both the activity and spending variances.

4.       What aspects of the flexible budget performance report should be brought to management’s attention? Explain.

Jun 28 2020 View more View Less

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