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 $326,000 Utilities 13,000 Depreciation 22,000 Total $361,000 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 $340,000 68,000 June 324,000 62,000 July 309,000 56,000 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 361,000. 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 $22.00 Utility cost per direct labor hour $0.90 Direct labor hours per unit 0.20 Planned monthly unit production 74,000 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 May June July Units of production 68,000 62,000 56,000 Wages v Utilities v Depreciation v Total $ Supporting calculations: Units of produ 68,000 62,000 56,000 Hours per unit X Total hours of production Wages per hour C$ * $ X $ Total wages $Total hours of production Utility costs per hour x $ X $ X Total utilities Feedback Check My Work For each level of production, show wages, utilities, and depreciation. b. Compare the flexible budget with the actual expenditures for the first three months. May June July 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.Production Budget Healthy Measures Inc. produces a Bath and Gym version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows: Bath Gym Scale Scale Northern Region unit sales 24,500 41,500 Southern Region unit sales 26,500 27,800 Total 51,000 69,300 The finished goods inventory estimated for March 1, for the Bath and Gym scale models is 1,600 and 2,100 units, respectively. The desired finished goods inventory for March 31 for the Bath and Gym scale models is 1,200 and 2,300 units, respectively. Prepare a production budget for the Bath and Gym scales for the month ended March 31. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Healthy Measures Inc. Production Budget For the Month Ending March 31 Units Bath Scale Units Gym Scale Total units available Total units to be producedSales and Production Budgets Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget: Rumble Thunder Estimated inventory (units), June 1 250 Desired inventory (units), June 30 287 65 Expected sales volume (units): Midwest Region 2,600 2,300 South Region 5,600 6,350 Unit sales price $95 $225 a. Prepare a sales budget. Sonic Inc. Sales Budget For the Month Ending June 30 Product and Area Unit Sales Volume Unit Selling Price Total Sales Model: Rumble Midwest Region South Region Total Model: Thunder Midwest Region South Region Total Total revenue from sales b. Prepare a production budget. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Sonic Inc. Production Budget For the Month Ending June 30 Units Rumble Units Thunder Total units available Total units to be produced