Chapter 07 Homework (Application Utilities February Static Budget versus Flexible Budget 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 $342.000 22.000 Depreciation 37,000 Total $401,000 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 5378,000 112,000 361,000 102,000 March 345,000 92,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for January-March have been significantly less than the monthly static budget of 401,000. 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 $14 Utility cost per direct labor hour $0.9 Direct labor hours per unit 0.2 Planned monthly unit production 122,000 a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places. Niland Company Machining Department Budget For the Three Months Ending March 31 January February Units of production 112,000 102,000 92.000 Wages March Utilities Depreciation Total Supporting calculations: Units of production Hours per unit 112,000 102,000 92.000 Check My Work Previous Next > Chapter 07 Homework (Application) For the Three Months Ending March 31 January February Units of production 112,000 102,000 Wages March 92,000 Utilities Depreciation 112,000 102,000 92,000 Total Supporting calculations Units of production Hours per unit Total hours of production Wages per hour xs X Total wages Total hours of production Utility costs per hour Total utilities Feedback For each level of production, show wages, utilities, and depreciation. Learning Objective 2, Learning Objective 4. March b. Compare the flexible budget with the actual expenditures for the first three months. January February Total flexible budget Actual cost Excess of actual cost over budget What does this comparison suggest? The Machining Department has performed better than originally thought The department is spending more than would be expected NO Yes Feedback Feedback Partially correct