Static Budget versus Flesbide Bode 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 $105,000 Uutis 24,000 Depreciation 41,000 Total $470,000 The actual amount sport and the actual units produced in the first three months in the Machining Department were as follows Amount spent Units Produced May $443,000 99,000 June 423,000 90,000 July 403,000 61.000 The Machining Department supervisior has been very pleased with this performance because actual expenditures for May-July have been significantly less than the mo static huset 470,000. However, the plant manager believes that the budget should not remain foxed for every month but should exor 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 $15.00 Utility cost per direct labor hour $0.90 Direct labor hours per unit 0.25 Planned monthly unit production 100,000 Wanned monthly unit production 108,000 a. Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depredation is a fixed cost. If required, use per amounts carried out to two decimal places Hagerstown Company Machining Department Budget For the Three Months Ending Duly 31 May June Units of production 99,000 90,000 Total 99,000 00.000 Supporting calculations Units of production Hours per unit Total hours of production bimbino: buon Wages per hour Total wages Total hours of production Utility costs per hour Total utilities 99,000 90,000 81,000 Supporting calculations: Units of production Hours per unit 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. May June July Total flexible budget 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