$9.)$ The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year:

Hagerstown Company

Machining Department

Monthly Production Budget

Wages $$476,000$

Utilities $23,000$

Depreciation $37,000$

Total $$536,000$

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

May $$505,000115,000$

June $478,000104,000$

July $456,00094,000$

The Machining Department supervisor has been very pleased with this performance because actual expenditures for May$$July have been significantly less than the monthly static budget of $536,000.$ However, the plant manager believes that the budget should not remain fixed for every month but should $$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 $$19\mathrm{.}00$

Utility cost per direct labor hour $$0\mathrm{.}90$

Direct labor hours per unit $0\mathrm{.}20$

Planned monthly unit production $125,000$

a$.$ Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places. b$.$ Compare the flexible budget with the actual expenditures for the first three months.

May June July

Total flexible budget $fill in the blank

$fill in the blank

$fill in the blank

Actual cost fill in the blank

fill in the blank

fill in the blank

Excess of actual cost over budget $fill in the blank

$fill in the blank

$fill in the blank

What does this comparison suggest?

The Machining Department has performed better than originally thought.

The department is spending more than would be expected.