EX 22-3 Static budget versus flexible budget OBJ. 2,4 he ordction supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: ed Niland Company Machining Department Monthly Production Budget $1,125,000 90,000 50,000 $1.265,000 he actual achining Department were as follows: amount spent and the actual units produced in the first three months in the Amount Spent Units Produced January February March $1,100,000 1,200,000 1,250,000 80,000 90,000 95,000 (Continued The Machining Department supervisor has been very pleased with this ner because actual expenditures for January-March have been less than the monthl budget of $1,265,000. However, the plant manager believes that the budget should o main fixed for every month but should "flex" or adjust to the volume of work t that is produced in the Machining Department. Additional budget information for the Machinins Department is as follows: Wages per hour Utility cost per direct labor hour Direct labor hours per unit Planned monthly unit production $15.00 $1.20 0.75 100,000 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. b. Compare the flexible budget with the actual expenditures for the first three months. What does this comparison suggest