Question
Please Answer for a rating CORRECTLY - ACCOUNTING The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget
Please Answer for a rating CORRECTLY - ACCOUNTING
The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year:
Hagerstown Company Machining Department Monthly Production Budget | |
Wages | $314,000 |
Utilities | 18,000 |
Depreciation | 30,000 |
Total | $362,000 |
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 | |||
May | $341,000 | 90,000 | ||
June | 326,000 | 82,000 | ||
July | 311,000 | 74,000 |
The Machining Department supervisor has been very pleased with this performance because actual expenditures for MayJuly have been significantly less than the monthly static budget of 362,000. 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 | $16.00 |
Utility cost per direct labor hour | $0.90 |
Direct labor hours per unit | 0.20 |
Planned monthly unit production | 98,000 |
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