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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

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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 SS. Wages June July Depreciation 6.000 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 $815,000 126.000 773.000 14.000 739,000 103.000 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 864,000. 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 couper director Director hours per Hanned monthly production 5120 0.25 37.000 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 13 July wwwroduction 12000 103.000 WAL DR. Sporting Unitation 126.000 14 3.000 Wes per hour BE 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 SS. Wages June July Depreciation 6.000 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 $815,000 126.000 773.000 14.000 739,000 103.000 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 864,000. 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 couper director Director hours per Hanned monthly production 5120 0.25 37.000 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 13 July wwwroduction 12000 103.000 WAL DR. Sporting Unitation 126.000 14 3.000 Wes per hour BE

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