Static Budget vs. Flexible Budget The production supervisor of the Machining Department for Nell Company agreed to the following monthly static budget for the upcoming year: Nell Company Machining Department Monthly Production Budget Wages Utilities Depreciation $306,000 16,000 27,000 $349,000 Total The actual amount spent and the actual units produced in the first three months of 2014 in the Machining Department were as follows: Amount Spent Units Produced $329,000 313,000 298,000 66,000 60,000 54,000 January February March 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 "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 Utility cost per direct labor hour Direct labor hours per unit Planned monthly unit production $17.00 $0.90 0.25 72,000