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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
Wages	$290,000
Utilities	25,000
Depreciation	41,000
Total	$356,000

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	$336,000		76,000
February	321,000		69,000
March	307,000		62,000

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 $356,000. 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	$14.00
Utility cost per direct labor hour	$1.20
Direct labor hours per unit	0.25
Planned monthly unit production	82,000

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 d726c20a1fe606e_1	fill in the blank d726c20a1fe606e_2	fill in the blank d726c20a1fe606e_3
Wages	$fill in the blank d726c20a1fe606e_4	$fill in the blank d726c20a1fe606e_5	$fill in the blank d726c20a1fe606e_6
Utilities	fill in the blank d726c20a1fe606e_7	fill in the blank d726c20a1fe606e_8	fill in the blank d726c20a1fe606e_9
Depreciation	fill in the blank d726c20a1fe606e_10	fill in the blank d726c20a1fe606e_11	fill in the blank d726c20a1fe606e_12
Total	$fill in the blank d726c20a1fe606e_13	$fill in the blank d726c20a1fe606e_14	$fill in the blank d726c20a1fe606e_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 90b618faafb8fd4_1	$fill in the blank 90b618faafb8fd4_2	$fill in the blank 90b618faafb8fd4_3
Actual cost	fill in the blank 90b618faafb8fd4_4	fill in the blank 90b618faafb8fd4_5	fill in the blank 90b618faafb8fd4_6
Excess of actual cost over budget	$fill in the blank 90b618faafb8fd4_7	$fill in the blank 90b618faafb8fd4_8	$fill in the blank 90b618faafb8fd4_9