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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 $519,000
Utilities 40,000
Depreciation 66,000
Total $625,000
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
January $590,000112,000
February 565,000102,000
March 540,00092,000
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 $625,000. 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 $17.00
Utility cost per direct labor hour $1.30
Direct labor hours per unit 0.25
Planned monthly unit production 122,000
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 Company-Machining Department
Flexible Production Budget
For the Three Months Ending March 31
January February March
Units of production fill in the blank 2a42b8fe3fd401d_1
fill in the blank 2a42b8fe3fd401d_2
fill in the blank 2a42b8fe3fd401d_3
Wages $fill in the blank 2a42b8fe3fd401d_4
$fill in the blank 2a42b8fe3fd401d_5
$fill in the blank 2a42b8fe3fd401d_6
Utilities fill in the blank 2a42b8fe3fd401d_7
fill in the blank 2a42b8fe3fd401d_8
fill in the blank 2a42b8fe3fd401d_9
Depreciation fill in the blank 2a42b8fe3fd401d_10
fill in the blank 2a42b8fe3fd401d_11
fill in the blank 2a42b8fe3fd401d_12
Total $fill in the blank 2a42b8fe3fd401d_13
$fill in the blank 2a42b8fe3fd401d_14
$fill in the blank 2a42b8fe3fd401d_15
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 07b1cbfd704ffb3_1
$fill in the blank 07b1cbfd704ffb3_2
$fill in the blank 07b1cbfd704ffb3_3
Total flexible budget fill in the blank 07b1cbfd704ffb3_4
fill in the blank 07b1cbfd704ffb3_5
fill in the blank 07b1cbfd704ffb3_6
Excess of actual cost over budget $fill in the blank 07b1cbfd704ffb3_7
$fill in the blank 07b1cbfd704ffb3_8
$fill in the blank 07b1cbfd704ffb3_9
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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