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Static Budget versus Flexible Budget The production supervisor of the Machining Department for Celtic Company agreed to the following monthly static budget for the upcoming
Static Budget versus Flexible Budget
The production supervisor of the Machining Department for Celtic Company agreed to the following monthly static budget for the upcoming year:
Celtic Company
Machining Department
Monthly Production Budget
Wages $
Utilities
Depreciation
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
January $
February
March
The Machining Department supervisor has been very pleased with this performance because actual expenditures for JanuaryMarch have been less than the monthly static budget of $ 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
Planned monthly unit production
Question Content Area
a Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume that depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places.
Celtic CompanyMachining Department
Flexible Production Budget
For the Three Months Ending March
January February March
Units of production fill in the blank abfefdd
fill in the blank abfefdd
fill in the blank abfefdd
Wages $fill in the blank abfefdd
$fill in the blank abfefdd
$fill in the blank abfefdd
Utilities fill in the blank abfefdd
fill in the blank abfefdd
fill in the blank abfefdd
Depreciation fill in the blank abfefdd
fill in the blank abfefdd
fill in the blank abfefdd
Total $fill in the blank abfefdd
$fill in the blank abfefdd
$fill in the blank abfefdd
Question Content Area
b Compare the flexible budget with the actual expenditures for the first three months.
January February March
Actual cost $fill in the blank bcbfdffb
$fill in the blank bcbfdffb
$fill in the blank bcbfdffb
Total flexible budget fill in the blank bcbfdffb
fill in the blank bcbfdffb
fill in the blank bcbfdffb
Excess of actual cost over budget $fill in the blank bcbfdffb
$fill in the blank bcbfdffb
$fill in the blank bcbfdffb
What does this comparison suggest?
The Machining Department has performed better than originally thought.
The department is spending more than would be expected.
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