Static Budget vs. Flexible Budget

The production supervisor of the Painting Department for Whitley Company agreed to the following monthly static budget for the upcoming year:

WHITLEY COMPANY Painting Department Monthly Production Budget
Wages	$720,000
Utilities	46,000
Depreciation	16,250
Total	$782,250

The actual amount spent and the actual units produced in the first three months in the Painting Department were as follows:

	Amount Spent		Units Produced
January	$600,000		37,500
February	678,000		42,500
March	712,500		45,000

The Painting 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 "flex" or adjust to the volume of work that is produced in the Painting Department. Additional budget information for the Painting Department is as follows:

Wages per hour	$18.00
Utility cost per direct labor hour	$1.15
Direct labor hours per unit	0.80 hrs.
Planned unit production	50,000 units

a. Prepare a flexible budget for the actual units produced for January, February, and March in the Painting Department. Assume depreciation is a fixed cost. Enter all amounts as positive numbers.

WHITLEY COMPANY
Painting Department
For the Three Months Ending March 31
	January	February	March
Units of production	37,500	42,500	45,000
Wages	$fill in the blank 842bc5fb1024fc3_1	$fill in the blank 842bc5fb1024fc3_2	$fill in the blank 842bc5fb1024fc3_3
Utilities	fill in the blank 842bc5fb1024fc3_4	fill in the blank 842bc5fb1024fc3_5	fill in the blank 842bc5fb1024fc3_6
Depreciation	fill in the blank 842bc5fb1024fc3_7	fill in the blank 842bc5fb1024fc3_8	fill in the blank 842bc5fb1024fc3_9
Total	$fill in the blank 842bc5fb1024fc3_10	$fill in the blank 842bc5fb1024fc3_11	$fill in the blank 842bc5fb1024fc3_12

Feedback

a. For each level of production, show wages, utilities, and depreciation. Calculate the total wages by multiplying number of units produced by hours per unit, then by wages per hour. Calculate the total utilities by multiplying the total hours of production by the utility cost per hour.

b. Compare the flexible budget with the actual expenditures for the first three months.

	January		February		March
Actual cost	$fill in the blank d6fc59fc302500f_1		$fill in the blank d6fc59fc302500f_2		$fill in the blank d6fc59fc302500f_3
Total flexible budget	fill in the blank d6fc59fc302500f_4		fill in the blank d6fc59fc302500f_5		fill in the blank d6fc59fc302500f_6
Excess of actual cost over budget	$fill in the blank d6fc59fc302500f_8		$fill in the blank d6fc59fc302500f_9		$fill in the blank d6fc59fc302500f_10