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eBook Show Me How Print Item Static Budget versus Flexible Budget The production supervisor of the Machining Department for Niland Company agreed to the following
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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.
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 |
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