Static budget versus flexible budgetThe production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year:Hagerstown CompanyMachining DepartmentMonthly Production BudgetLine Item DescriptionAmountWages$$486,000$Utilities$24,000$Depreciation$41,000$ Total$$551,000$The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows:MonthAmount SpentUnits ProducedMay$$519,00099,000$ June$494,00090,000$ July$470,00081,000$ The Machining Department supervisor has been very pleased with this performance because actual expenditures for MayJuly have been significantly less than the monthly static budget of $551,000.$ However, the plant manager believes that the budget should not remain fixed for every month but should flex or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:Line Item DescriptionAmountWages per hour$$18\mathrm{.}00$Utility cost per direct labor hour$$0\mathrm{.}90$Direct labor hours per unit$0\mathrm{.}25$Planned monthly unit production$108,000$Question Content Areaa. Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places.Hagerstown CompanyMachining Department BudgetFor the Three Months Ending July $31$Line Item DescriptionMayJuneJulyUnits of production$99,00090,00081,000$$Wages$Wages$WagesUtilitiesUtilitiesUtilitiesDepreciationDepreciationDepreciationTotal$Total$Total$TotalSupporting calculations:Units of production$99,00090,00081,000$Hours per unitx Hours per unitx Hours per unitx Hours per unitTotal hours of productionTotal hours of productionTotal hours of productionTotal hours of productionWages per hourx $Wages per hourx $Wages per hourx $Wages per hourTotal wages$Total wages$Total wages$Total wagesTotal hours of productionTotal hours of productionTotal hours of productionTotal hours of productionUtility costs per hourx $Utility costs per hourx $Utility costs per hourx $Utility costs per hourTotal utilities$Total utilities$Total utilities$Total utilitiesQuestion Content Areab. Compare the flexible budget with the actual expenditures for the first three months.Line Item DescriptionMayJuneJulyTotal flexible budgetfill in the blank $1$ of $9$$fill in the blank $2$ of $9$$fill in the blank $3$ of $9$$Actual costfill in the blank $4$ of $9$fill in the blank $5$ of $9$fill in the blank $6$ of $9$Excess of actual cost over budgetfill in the blank $7$ of $9$$fill in the blank $8$ of $9$$fill in the blank $9$ of $9$$What does this comparison suggest?