1) Flexible Budget for Assembly Department

Cabinaire Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department:

Direct labor per filing cabinet	20 minutes
Supervisor salaries	$147,000 per month
Depreciation	$23,000 per month
Direct labor rate	$21 per hour

Prepare a flexible budget for 10,000, 13,000, and 15,000 filing cabinets for the month of August in the Assembly Department, similar to Exhibit 5. Assuming that inventories are not significant. Enter all amounts as positive numbers.

CABINAIRE INC-ASSEMBLY DEPARTMENT Flexible Production Budget For the Month Ending August 31 (assumed data)

Units of production	10,000	13,000	15,000
Variable cost:
Direct labor	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Total variable cost	$fill in the blank 4	$fill in the blank 5	$fill in the blank 6
Fixed cost:
Supervisor salaries	$fill in the blank 7	$fill in the blank 8	$fill in the blank 9
Depreciation	fill in the blank 10	fill in the blank 11	fill in the blank 12
Total fixed cost	$fill in the blank 13	$fill in the blank 14	$fill in the blank 15
Total department cost	$fill in the blank 16	$fill in the blank 17	$fill in the blank 18

2.

The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year:

Niland Company Machining Department Monthly Production Budget
Wages	$310,000
Utilities	22,000
Depreciation	37,000
Total	$369,000

The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows:

	Amount Spent		Units Produced
January	$349,000		79,000
February	334,000		72,000
March	320,000		65,000

The Machining Department supervisor has been very pleased with this performance because actual expenditures for JanuaryMarch have been less than the monthly static budget of $369,000. However, the plant manager believes that the budget should not remain fixed for every month but should flex or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:

Wages per hour	$18.00
Utility cost per direct labor hour	$1.30
Direct labor hours per unit	0.20
Planned monthly unit production	86,000

a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume that depreciation is a fixed cost. Enter all amounts as positive numbers. If required, use per unit amounts carried out to two decimal places.

Niland Company-Machining Department Flexible Production Budget For the Three Months Ending March 31

	January	February	March
Units of production	fill in the blank c761b4faaff5025_1	fill in the blank c761b4faaff5025_2	fill in the blank c761b4faaff5025_3
Wages	$fill in the blank c761b4faaff5025_4	$fill in the blank c761b4faaff5025_5	$fill in the blank c761b4faaff5025_6
Utilities	fill in the blank c761b4faaff5025_7	fill in the blank c761b4faaff5025_8	fill in the blank c761b4faaff5025_9
Depreciation	fill in the blank c761b4faaff5025_10	fill in the blank c761b4faaff5025_11	fill in the blank c761b4faaff5025_12
Total	$fill in the blank c761b4faaff5025_13	$fill in the blank c761b4faaff5025_14	$fill in the blank c761b4faaff5025_15

b. Compare the flexible budget with the actual expenditures for the first three months.

	January	February	March
Total flexible budget	$fill in the blank 939297fa3073fa1_1	$fill in the blank 939297fa3073fa1_2	$fill in the blank 939297fa3073fa1_3
Actual cost	fill in the blank 939297fa3073fa1_4	fill in the blank 939297fa3073fa1_5	fill in the blank 939297fa3073fa1_6
Excess of actual cost over budget	$fill in the blank 939297fa3073fa1_7	$fill in the blank 939297fa3073fa1_8	$fill in the blank 939297fa3073fa1_9

What does this comparison suggest?

The Machining Department has performed better than originally thought.	Yes/No
The department is spending more than would be expected.	Yes/No