Static Budget vs. FIeXIble Budget The production supervisor of the Machining Department for Lei Company agreed to the following monthly static budget for the upcoming year: LEI COMPANY Machining Department Monthly Production Budget Wages $963,000 Utilities 46,000 Depreciation 76,000 Total $1,085,000 ' 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 $1,021,000 93,000 February 967,000 84,000 March 924,000 76,000 The Machining Department supervisor has been very pleased with this performance, since actual expenditures have been less than the monthly budget. However, the plant manager believes that the budget should not remain fixed for every month but should I'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 $19.00 Utility cost per direct labor hour $0.90 Direct labor hours per unit 0.50 hrs. Planned unit production 101,000 units 3. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. Enter all amounts as positive numbers. If required, round per unit amounts to the nearest cent. ) LEI COMPANY Machining Department For the Three Months Ending March 31 January February March Units of production 93,000 84,000 76,000 Wages $:] $:] $:] Utilities C] C] C] Depreciation C] C] C] Total $:] 35:] E5:] b. Compare the flexible budget with the actual expenditures for the first three months. January February March Actual cost $:] $:] 53:] Total llexlble budget :l :l :l . $:] $:l $:l What does this comparison suggest? Has the Machining Department performed better than originally thought? ' Is the department spending more than expected