Static Budget versus Flexible Budget The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: Niland Company Machining Department Monthly Production Budget Wages $813,000 Utilities 43,000 Depreciation 70,000 $926,000 Total 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 $872,000 January 71,000 February 824,000 64,000 58,000 March 789,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for January-March have been less than the monthly static budget of $926,000. 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: b. Compare the flexible budget with the actual expenditures for the first three months. February March January 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