State Budget versus Flexible Budget The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly state budget for the upcoming van Hagerstown Company Machining Department Monthly Production Budget Wages 5528,000 Utilities 29,000 Depreciation 48,000 Total $605,000 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 $570,000 88,000 June 543,000 80,000 July 517.000 72,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly static budget of 605,000. However, the plant manager believes that the budget should not remain fixed for every month but should flexor 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 $22.00 Utility cost per direct labor hour Direct labor hours per unit 0.25 Planned monthly unit production 96,000 $1.20 a. Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a found cost. If required, use perunt amounts carried out to two decimal places Hagerstown Company Machining Department Budget For the Three Months Endine July 31 Next > 0.25 Planned monthly unit production 96,000 a. Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a foed cost. If required, use per unit amounts carried out to two decimal places Hagerstown Company Machining Department Budget For the Three Months Ending July 31 May June July Units of production 88,000 80,000 72,000 Total Supporting calculations: Units of production Hours per unit 85,000 80,000 72,000 Total hours of production Wages per hour Total wages Total hours of production Utility costs per hour Total utilities b. Compare the flexible budget with the actual expenditures for the first three months M Next Check My Work Email Instructor Save and ER Submit Assignment for Gra 3:41 Vi i production 88,000 80,000 72,000 Hours per unit Total hours of production Wages per hour XS Total wages Total hours of production Utility costs per hour Total utilities b. Compare the flexible budget with the actual expenditures for the first three months. May June Total flexible budget ly Actual cost Excess of actual cost over budget What does this comparison suggest? The Machining Department has performed better than originally thought The department is spending more than would be expected
