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 $460,000 Utilities 27,000 Depreciation 45,000 Total $532,000 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 $501,000 124,000 June 479,000 113,000 July 458,000 102,000 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 532,000. However, the plant hanager believes that the budget should not remain fixed for every month but should ex 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 $1.00 Direct labor hours per unit 0.20 Planned monthly unit production 136,000 For the Three Months Ending July 31 May June Units of production 124,000 113,000 July 102,000 Total 124,000 113,000 Supporting calculations: Units of production Hours per unit 102,000 x Total hours of production XS Wages per hour Total wages Total hours of production Utility costs per hour Total utilities b. Compare the flexible budget with the actual expenditures for the first three months. June July May Total flexible budget Actual cost Excess of actual cost over budget