Oak Hill Township operates a motor pool with 20 vehicles. The motor pool furnishes gasoline, oil, and other supplies for the cars and hires one mechanic who does routine maintenance and minor repairs. Major repairs are done at a nearby commercial garage. A supervisor manages the operations. Each year, the supervisor prepares a master budget for the motor pool. Depreciation on the automobiles is recorded in the budget to determine the costs per mile. The following schedule presents the master budget for the year and for the month of July. OAK HILL TOWNSHIP Motor Pool Budget Report for July Annual One-Month Over- or Master Master Budget Budget July Actual (Under-) Budget Gasoline $ 81,000 $ 6,750 $ 8,471 $1,721 Oil, minor repairs, parts, and 7,200 600 757 157 supplies Outside repairs 6,000 500 150 (350) Insurance 10,800 900 945 45 Salaries and benefits 57,600 4,800 4,800 0 Depreciation 48,000 4,000 4,200 200 Total cost $210,600 $17,550 $19,323 $1,773 Total miles Cost per mile Number of automobiles 900,000 75,000 94,000 $ 0.2340 $0.2340 $0.2056 20 20 21 The annual budget was based on the following assumptions: 1. Automobiles in the pool: 20. 2. Miles per year per automobile: 45,000. 3. Miles per gallon per automobile: 20. 4. Gas per gallon: $1.80. 5. Oil, minor repairs, parts, and supplies per mile: $0.008. 6. Outside repairs per automobile per year: $300. The supervisor is unhappy with the monthly report, claiming that it unfairly presents his performance for July. His previous employer used flexible budgeting to compare actual costs to budgeted amounts. Required: (a) What is the gasoline monthly flexible budget and the resulting amount over- or underbudget? (Use miles as the activity base.) (Do not round your intermediate calculations.) Flexible budget