Static Budget versus Flexible Budget The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: Niland Company Machining Department Monthly Production Budget Wages $1,125,000 Utilities 90,000 Depreciation 50,000 Total $1,265,000 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 $1,100,000 80,000 February 90,000 1,200,000 1,250,000 March 95,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for January-March have been significantly less than the monthly static budget of $1,265,000. 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: $15.00 Wages per hour Utility cost per direct labor hour $1.20 Direct labor hours per unit 0.75 Planned monthly unit production 100,000 a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places. Niland Company Machining Department Budget For the Three Months Ending March 31 January February March Units of production 80,000 90,000 95,000 Wages 900,000 $ 1,012,500 $ 1,068,750 Utilities 72,000 81,000 85,500 Depreciation 50, IMIO 50,000 50,01 Total 1,022,000 | $1,143,500 1,204,250 Supporting calculations: Units of production 80,000 90,000 95,000 0.75 0.75 0.75 Hours per unit Total hours of production 60,000 67.500 71.250 Wages per hour 15 x 15 x $ 15 Total wages $ 900,00 $ 1,012,5110 1,068,750 Total hours of production 72, Mi2 | X 81,000 X 85,500 x Utility costs per hour 1.2 X 1.2 x 5 1.2 Total utilities $ $ 86,400 X 97,200 X 102.600 X