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 prepared monthly for each department. The planning budget and flexiblebudget for the Production Department are based on the following formulas, where q is the number of direct labor-hours worked in a month:
The actual costs incurred in November in the Production Department are listed below:
· 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 Department’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.