Static budget versus flexible budget

Static Budget versus Fleable Budget The production supervisor of the Machining Department for and Company agreed to the following monthly static budget for the upcoming year: Niland Company Machining Department Monthly Production Budget Wages $323,000 Utilities 16,000 Depreciation 27,000 Total $366,000 The actual amount spent and the actual units produced in the first three month achining Department were as follows: Amount Spent Units Produced January $345.000 74.000 February 331,000 60,000 March 314,000 61.000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for any of 366,000. However the plant manager believes that the budget should not remained for every month but thoudho Department. Additional budget information for the Machining Department is as follows: Wages per hour $20 oth have been candy than the monthly st to the volume of work that in the The Machining Department supervisor has been very pleased with this performance because actual expenditures for January-March have been significantly less than the monthly static budget of 366,000. However, the plant manager believes that the budget should not remain foxed for every month but should fix 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 $20 Utility cost per direct labor hour $1 Direct labor hours per unit 0.2 Planned monthly unit production 81,000 a. Prepare a feble budget for the actual units produced for January February, and March in the Machining Department s e deprecationis a d cost required, use per un amounts carried out to two decimal places Niland Company Machining Department Budget For the Three Months Ending March 31 February Units of production Tot Supporting calculations Units of production Hours per una 74.000 60.000 61.000 it#2 (Chapters 19, 20, 21) CONCLOUW CTo Process Calculator Print Item Niland Company Machining Department Budget For the Three Months Ending March 31 January February Units of production 74,000 68,000 March 61,000 Total 74,000 68,000 Supporting calculations: Units of production Hours per unit Total hours of production 61,000 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 mon January February Type here to search 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. January February March 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. dropdown 1 O Type here to search