Static budget versus flexible budget 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 Utilities Depreciation $512,000 28,000 Total 47,000 $587,000 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 June $554,000 525,000 503,000 July 94,000 85,000 77,000 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 587,000. 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 Utility cost per direct labor hour Direct labor hours per unit $20.00 $1.10 0.25 Planned monthly unit production 102,000 eBook Direct labor hours per unic Show Me How 0.25 Print Item Planned monthly unit production 102,000 a. Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a fixed 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 Line Item Description Units of production Total 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 May 94,000 X June July 85,000 77,000 94,000 85,000 77,000 0000000 b. Compare the flexible budget with the actual expenditures for the first three months. Total flexible budget Actual cost May 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. June July Production budget Healthy Habits Inc. produces a Bath version and a Gym version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows: Bath Gym Scale Scale. Western Region unit sales 18,900 36,900 20,400 21,400 39,300 58,300 Eastern Region unit sales Total The finished goods inventory estimated for January 1, for the Bath and Gym scale models is 1,300 and 2,900 units, respectively. The desired finished goods inventory for January 31 for the Bath and Gym scale models is 900 and 3,200 units, respectively. Prepare a production budget for the Bath and Gym scales for the month ended January 31. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Healthy Habits Inc. Production Budget For the Month Ending January 31 Line Item Description Units Bath Scale Units Gym Scale Total units available Total units to be produced