Static BudgetversusFlexible Budget

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

CengageNOWv2 | Online teachin X P ) My Collection - Stations - Pc X course hero - Bing X Course Hero X + X @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false . . Ch. 22, Quiz B 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 $795,000 Utilities 44,000 Depreciation 73,000 Total $912,000 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 $859,000 81,000 February 812,000 73,000 March 777,000 66,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for January-March have been less than the monthly static budget of $912,000. 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: Wages per hour $18.00 10:43 PM Type here to search O 81.F 8/7/2021 22CengageNOWv2 | Online teachin X P ) My Collection - Stations - Pc X course hero - Bing X Course Hero X + X @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false . . Ch. 22, Quiz B positive numbers. If required, use per unit amounts carried out to two decimal places. Niland Company-Machining Department Flexible Production Budget For the Three Months Ending March 31 January February March Units of production Wages Utilities Depreciation Total b. Compare the flexible budget with the actual expenditures for the first three months. January February March Total flexible budget Actual cost Excess of actual cost over budget What does this comparison suggest? The Machining Department has performed better than originally thought. The department is spending more than would be expected. Type here to search O 10:43 PM 8/7/2021 22