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 $16.40q Indirect labor $4,100 + $1.30q Utilities $5,400 + $0.80q Supplies $1,600 + $0.20q Equipment depreciation $18,200 + $2.70q Factory rent $8,300 Property taxes $2,900 Factory administration $13,600 + $0.60q 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: Actual Cost Incurred in March Direct labor $ 65,560 Indirect labor $ 8,610 Utilities $ 9,070 Supplies $ 2,630 Equipment depreciation $ 28,730 Factory rent $ 8,700 Property taxes $ 2,900 Factory administration $ 15,290 Required:
1. Prepare the Production Department’s planning budget for the month.
2. Prepare the Production Department’s flexible budget for the month.
3. Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.