eBook Show Me How 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 Utilities Depreciation Total $207,000 12,000 20,000 $239,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: January February March Amount Spent Units Produced $225,000 217,000 205,000 50,000 46,000 41,000 13 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 239,000. 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 Utility cost per direct labor hour Direct labor hours per unit $19 $1.1 Planned monthly unit production 0.2 55,000 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 Units of production Wages Utilities Depreciation Chad My Work January 50,000 February 46,000 March 41,000