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 $1,319,000 Utilities 66,000 Depreciation 110,000 $1,495,000 Total 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 121,000 January $1,408,000 February 1,341,000 110,000 March 1,276,000 99,000 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 1,495,000. 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: $20 Wages per hour Utility cost per direct labor hour $1 Direct labor hours per unit 0.5 132,000 Planned monthly unit production 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 March February 110,000 January Units of production 121,000 99,000 Total Supporting calculations: Units of production 121,000 99,000 110,000 Hours per unit Total hours of production x $ X $ x $ Wages per hour Total wages Total hours of production x $ x $ x $ Utility costs per hour Total utilities b. Compare the flexible budget with the actual expenditures for the first three months. February March January Total flexible budget Actual cost $ Excess of actual cost over budget